Consumer sentiment plunges as US ‘frightened’ of ‘sharply higher prices’

Consumer sentiment in the United States has plunged to a nearly two-and-a-half-year low, and inflation expectations have soared amid worries that President Donald Trump’s sweeping tariffs, which have ignited a trade war, would boost prices and undercut the economy.

The deterioration in sentiment in March and inflation expectations reported by the University of Michigan Surveys of Consumers on Friday were across political party affiliations with consumers saying “frequent gyrations in economic policies make it very difficult for consumers to plan for the future.”

That mirrors similar concerns in some business surveys. The uncertainty created by Trump’s on-again, off-again tariffs as well as an escalation in trade tensions risks derailing an economic expansion. Fears of higher prices, which drove consumers’ long-term inflation expectations to levels last seen in early 1993, create a challenge for Federal Reserve officials as they consider the next steps for monetary policy.