U.S. consumer sentiment fell again declining each month so far in 2025 with March's final reading coming in at 57.0 vs. the flash estimate of 57.9 and 64.7 in February, below expectations for 57.9 in the Econoday survey of forecasters.

"Consumers continue to worry about the potential for pain amid ongoing economic policy developments," the report says."Notably, two-thirds of consumers expect unemployment to rise in the year ahead, the highest reading since 2009."

This trend reveals a key vulnerability for consumers, given that strong labor markets and incomes have been the primary source of strength supporting consumer spending in recent years, the report added.

The final year-ahead inflation expectations surged to 5 percent in March, jumping from 4.3 percent in February. This is the highest reading since November 2022 and marking three consecutive months of unusually large increases.

Long-run inflation expectations in March went up to 4.1 percent from 3.5 percent last month.

No change from the flash is expected with the index unrevised at its recessionary 57.9 in the final March report. No revision is seen in the newly-elevated 1-year inflation expectations figure at 4.9 percent.

The University of Michigan's Consumer Survey Center questions households each month on their assessment of current conditions and expectations of future conditions. Preliminary estimates for a month are released at mid-month and are based on about 420 respondents. Final estimates are released near the end of the month and are based on about 600 respondents.

The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer sentiment index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.