Washington —
Americans are growing more pessimistic about the US economy as the war on Iran continues to roil markets, with sentiment falling across all income groups — including the wealthiest.
Consumer sentiment declined 6% this month to a final reading of 53.3, the University of Michigan said Friday, a steeper drop than the one reported earlier this month, when the war had just started. Sentiment is now at its lowest point since December. Friday’s level was lower than the 54.2 reading that economists projected in a poll by data firm FactSet.
The Middle East conflict has pushed up global energy prices for the last month, prompting major US stock indexes to whipsaw as investors look for signs that it may end soon. President Donald Trump says the administration is engaged in talks with Iran.
“Declines were seen across age and political party,” Joanne Hsu, the survey’s director, said in a release. “Consumers with middle and higher incomes and stock wealth, buffeted by both escalating gas prices and volatile financial markets in the wake of the Iran conflict, exhibited particularly large drops in sentiment.”
A prolonged war could both jack up inflation and tip the US economy into recession. Gas prices across America have already surged since the onset of the conflict.
Americans’ expectations for inflation in the year ahead posted the biggest monthly increase in about a year, climbing to 3.8% from 3.4% in February, higher than anything seen in 2024.
However, the respondents in the survey don’t expect higher inflation spurred by the war to stick around over the next five to 10 years, with long-run inflation expectations actually edging lower this month to 3.2%.
