Michigan Consumer Sentiment Continues To Collapse

Michigan Consumer Sentiment fell to 57.9, coming in much lower than forecast in March, 2025. This signals the growing fear and pessimism among consumers over tariffs, inflation and the United States economy. Investors should remember, the U.S. economy is driven by consumer spending. If the consumer is pulling back, a recession may not be far behind.

Here are the details of what Michigan Consumer Sentiment measures...

The University of Michigan Consumer Sentiment Index (MCSI) is a monthly survey that measures consumer confidence in the United States. While the name includes "Michigan," it surveys a representative sample of households across the entire contiguous United States, not just Michigan.

Here's a breakdown of what it signifies:

• What it measures: The MCSI aims to gauge consumers' feelings about their personal finances, the current state of the economy, and their expectations for the future. It covers areas like:

  • Personal financial situation
  • Short-term general economic outlook
  • Long-term general economic outlook
  • Buying conditions for major household items

• How it's conducted: The University of Michigan conducts at least 500 telephone interviews each month to gather this information.

• Importance as an economic indicator: Consumer spending makes up a significant portion of the U.S. economy (around 68%). Therefore, the MCSI is closely watched by economists, businesses, and policymakers as a leading indicator of potential changes in consumer behavior and overall economic activity. A higher sentiment generally suggests consumers are optimistic and more likely to spend, while lower sentiment indicates pessimism and a potential pullback in spending.

• Recent Data (as of March 16, 2025): The preliminary report for March 2025, released on March 14, 2025, showed a significant decrease in the MCSI, falling to 57.9. This is the lowest level since November 2022.

  • This decline was larger than expected and marks the third consecutive month of decreasing sentiment.
  • Concerns about policy uncertainty and other economic factors were cited as reasons for the drop.
  • While views on current economic conditions were relatively unchanged, expectations for the future across various economic aspects, including personal finances, labor markets, inflation, business conditions, and stock markets, deteriorated.
  • Inflation expectations also increased, with both the year-ahead and five-year inflation gauges rising.

In summary, the United States Michigan Consumer Sentiment Index is a key tool for understanding how consumers feel about the economy.

The latest data indicates a notable drop in confidence, driven by concerns about the future and rising inflation expectations.