US Consumer Sentiment Hits Lowest Point Since 2022 Due to Tariff Concerns: How Will Consumers React?

The state of the American consumer's health appears to be in flux, largely due to economic uncertainty and policy direction initiated by President Donald Trump in the early days of his second term.

According to CNBC, the University of Michigan Survey of Consumers posted a March reading of 57.9 — a figure that represents a 10.5% decline from February and that also fell short of the Dow Jones consensus estimate of 63.2. The reading is also the lowest measured since November of 2022 and is a significant 27.1% drop from the reading taken a year ago.

The overall lowered sentiment among American consumers appeared to cross party lines, at least in part.

“Many consumers cited the high level of uncertainty around policy and other economic factors; frequent gyrations in economic policies make it very difficult for consumers to plan for the future, regardless of one’s policy preferences,” said Joanne Hsu, the survey’s director.

Republicans, Democrats, and Independents Saw Lowered Consumer Sentiment, but by Different Degrees

“Consumers from all three political affiliations are in agreement that the outlook has weakened since February,” Hsu noted.

"Despite their greater confidence following the election, Republicans posted a sizable 10% decline in their expectations index in March," she added.

Sentiment fell even more for respondents identifying as Democrats, with a tumble of 24%, while Independents saw sentiment drop by 12%.

Inflation fears tied to tariffs and associated economic policies issued by the Trump administration also seemed to have ticked upward, per CNBC. The one-year outlook trended upward to 4.9%, the highest reading since November 2022, and was up 0.6% when compared to February's number. Regarding the five-year outlook, that jumped by 0.4% to rest at 3.9% — notably, the highest measurement since February of 1993.

Pantheon Macroeconomics Chief Economist Samuel Tombs expressed his position on the report's findings in unambiguous terms.

"This is a horrific report. Elevated economic policy uncertainty and the sharp drop in stock prices have greatly undermined consumer confidence," Tombs said, according to Retail Dive.

Tombs went on to issue a prediction regarding year-over-year growth in consumption for the first quarter of 2025, suggesting that said growth would slip to 1.5% from Q4's rate of 3.2%. March could be even worse, the economist indicated.

“The March level [of consumer sentiment] alone points to even slower growth — just 0.5%,” Tombs concluded.