UM consumer sentiment index falls in March

By Xu Jing

CHICAGO, March 31 (Xinhua) -- The Consumer Sentiment Index released Friday by the University of Michigan (UM) Surveys of Consumers fell to 62.0 in the March 2023 survey, down from 67.0 in February but above last March's 59.4.

The Current Index fell to 66.3 in March, down from 70.7 in February and below last March's 67.2; and the Expectations Index fell to 59.2, down from 64.7 in February but above last March's 54.3.

Consumer sentiment fell for the first time in four months in the wake of a 13-percent decline in consumers' outlook over the economy for the year ahead.

Inflation continued to be a drag on consumer attitudes, as about 38 percent of consumers blamed inflation for eroding their personal finances. Amid continued high prices and rising borrowing costs, consumer perceptions of buying conditions for large durable goods, vehicles and homes all worsened in March.

About 78 percent of consumers expect inflation to cause more serious hardship in the year ahead than unemployment, down only slightly from a year ago. Consumers' outlook for the economy deteriorated this month, weakened by persistently high prices.

Due to continued pressure from high prices, consumer sentiment experienced downward momentum prior to the collapse of Silicon Valley Bank and the financial turbulence that ensued. Still, consumer attitudes remained more favorable than a year ago, said UM economist Joanne Hsu, director of the surveys.

"News about banks and financial markets are much less relatable to the typical American consumer than news about inflation, unemployment or politics. As such, the recent bank failures played a very minor role in this month's declines in consumer sentiment," she said. "However, if the current turbulence in the banking sector leads to tightening borrowing conditions, further deterioration of consumer attitudes is likely to follow."

The Surveys of Consumers is a rotating panel survey based on a nationally representative sample that gives each household in the coterminous United States an equal probability of being selected. Interviews are conducted throughout the month by telephone.

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