The unexpected fall in U.S. consumer sentiment

The unexpected fall in U.S. consumer sentiment

Analysts note an unexpected fall in U.S. consumer sentiment, saying American buyers are getting pummeled from all sides.

Supply chain constraints and high demand mean delays for products and rising costs. Now gas prices are soaring on the back of the Russia-Ukraine conflict, creating an even more bitter cocktail.

According to analysts, the largest cause of concern for Americans is price increases, as well as the possible consequence of Russia’s invasion of Ukraine.

The sentiment of US consumers turned pessimistic in Mar-22 as Americans expressed concern over the multi-decades high inflation, say analysts from MIDF.

According to the preliminary readings, the US University of Michigan consumer sentiment index plunged to a 10-year low of 59.7 in Mar-22 (Feb-22: 62.8).

Among the sub-indexes, consumers view on current and future economic conditions deteriorated during the month.

In addition, Americans were more worried about their personal financial outlook in view of the soaring consumer prices as the inflation expectations index for the year ahead jumped to the fastest pace in 41 years.

Consumer Expectations

“Looking ahead, we opine that the reduced consumer confidence will hinder private household spending activities.

“Given the latest sanctions imposed on the Russian imports, we foresee this would further translate into skyrocketing gasoline prices which will affect the US consumer sentiment in the coming months, in addition to the tightening of the monetary policy in the upcoming FOMC meeting this week,” it says.

According to early estimates, consumer confidence in the United States dipped to 59.7 in March 2022 from 62.8 in February, falling short of market expectations of 61.4.

It is the lowest rating since November 2011, when inflation expectations soared owing to a jump in gasoline costs fueled by Russia’s invasion of Ukraine.

The Index of Consumer Expectations focuses on three areas: how consumers perceive prospects for their individual financial condition, prospects for the broader economy in the short term, and prospects for the economy in the long term.