Gas Prices, Iran Conflict Weigh on U.S. Consumer Mood in March — Evening Brief – 03.27.26

U.S. consumer sentiment deteriorated in March as rising inflation expectations and geopolitical uncertainty weighed on households, signaling growing pressure on the economic outlook. 

The University of Michigan Consumer Sentiment Index fell to 53.3 in its final March reading, down from 55.5 in the preliminary estimate and 56.6 in February. The decline marks the lowest level since December 2025 and reflects broad-based weakness across demographic groups. 

“Consumer sentiment fell back 6% this month to its lowest level since December 2025,” said Joanne Hsu, Director of the Surveys of Consumers. She noted that declines were widespread, cutting across age, income and political affiliation. 

Higher-income households and those with equity exposure saw particularly sharp declines, as elevated gas prices and increased market volatility—following the onset of the Iran conflict—eroded confidence. 

Inflation expectations moved higher, reinforcing concerns about persistent price pressures. One-year inflation expectations jumped to 3.8%, up from 3.4% in both the preliminary reading and February, marking the largest monthly increase since April 2025. Longer-term expectations remained elevated, with five-year inflation expectations holding at 3.2%, above pre-pandemic norms. 

“Consumers with middle and higher incomes and stock wealth…exhibited particularly large drops in sentiment,” Hsu added. 

Underlying components also weakened. The current conditions index fell to 55.8, while the expectations index dropped to 51.7, highlighting a more cautious outlook. 

Interviews for the March survey were conducted between February 17 and March 23, with roughly two‑thirds completed after the onset of the conflict, underscoring the impact of geopolitical and energy shocks on household sentiment.