The Michigan Consumer Sentiment Index (MCSI) is a monthly survey conducted by the University of Michigan that measures consumer confidence levels in the United States. The survey gathers data through telephone interviews, focusing on consumer expectations for the economy, their current financial health, and the prospects for longer-term economic growth.
Consumer sentiment is considered a valuable economic indicator as it reflects the overall health of the economy based on people’s opinions and feelings. The MCSI takes into account short-term and long-term economic expectations, providing insights into consumer spending and saving behavior
Michigan Consumer Sentiment: March 2025
The latest data for March 2025 shows that consumer sentiment has continued to decline for the third month in a row. The Index of Consumer Sentiment fell to 57.9, dropping 10.5% compared to last month and 27.1% compared to the same time last year. The Index of Consumer Expectations also saw a big drop, falling to 54.2, which is 15.3% lower than last month and 30.0% lower than last year. The Current Economic Conditions index declined less sharply, reaching 63.5, down 3.3% from last month and 23.0% from last year.
The University of Michigan Surveys of Consumers found that consumer sentiment has declined across all demographic and political groups. Since December 2024, the sentiment index has dropped by 22%. People’s expectations for the future have worsened in areas like personal finances, jobs, inflation, and business conditions. Many blamed uncertainties in economic policies for the drop in confidence.
Different political groups showed varying levels of decline. Republicans’ expectations fell by 10%, while Independents and Democrats saw larger drops of 12% and 24%, respectively.
Inflation expectations have also risen sharply. Short-term inflation expectations increased from 4.3% in February to 4.9% in March, the highest since November 2022.
Long-term inflation expectations rose from 3.5% to 3.9%, the biggest monthly jump since 1993, especially among Independents.
Overall, there are struggles consumers face due to economic uncertainty and shifting policies, emphasizing the need for stability to rebuild confidence.
Impacts of the Report on Stock Market
The decline in consumer sentiment, as highlighted in the report, can have significant effects on the stock market. When consumer confidence drops, people tend to spend less, which can hurt corporate revenues and profits. This often leads to a decline in stock prices, especially for companies that rely heavily on consumer spending.
Additionally, rising inflation expectations, as noted in the report, can create uncertainty in the market. Higher inflation often leads to concerns about increased costs for businesses and holds high interest rates, which can further weigh on stock market performance.
Investor behavior is also influenced by consumer sentiment. When sentiment is low, investors may become more cautious, leading to reduced demand for stocks and increased market volatility. This can result in a bearish market trend, where stock prices generally decline.
