In March, consumer confidence experienced a notable decline, as evidenced by a new report indicating a significant dip in consumers' short-term expectations to the lowest level seen in 12 years. The Conference Board's Expectations Index fell to its lowest point since the financial crisis, reflecting a deepening pessimism about future business conditions and employment prospects. Additionally, plans for major purchases like homes and cars have decreased, while inflation concerns continue to rise among consumers.

The Consumer Confidence Index dropped below economists' predictions, reaching its lowest point since early 2021. Stephanie Guichard from The Conference Board highlighted that only assessments of present labor market conditions improved slightly. Meanwhile, views on current business conditions weakened, and consumers expressed diminishing optimism about their future income due to economic and labor market worries.

Consumer Sentiment Shifts Across Age Groups

Recent data indicates a shift in consumer sentiment, particularly affecting older demographics. While younger consumers demonstrated increased confidence based on improving perceptions of their current situations, those aged 35-55 and over 55 exhibited more pessimistic outlooks. This disparity suggests differing interpretations of economic conditions across generations.

Breaking down the age groups, it becomes evident that consumers over 55 years old were primarily responsible for driving the decline in confidence. Conversely, individuals under 35 showed an uptick in confidence, largely influenced by positive assessments of their immediate circumstances. However, this group still harbored some reservations regarding future prospects. The middle-aged cohort, aged between 35 and 55, experienced a moderate decrease in confidence, illustrating a nuanced response to economic indicators. These variations highlight how different life stages and experiences shape economic perspectives differently.

Rising Inflation Expectations and Purchasing Plans

As inflation expectations climb, consumers are reevaluating their purchasing strategies. Average 12-month inflation forecasts reached 6.2% in March, up from February's figures, fueled by concerns over tariffs impacting household staples. This has led to a reduction in plans for significant purchases such as homes and vehicles, although interest in other big-ticket items persists.

Consumers' rising inflation expectations have prompted changes in purchasing behavior. With anticipated price hikes driven by tariffs, many are accelerating plans to acquire appliances and electronics before costs escalate further. Despite this, intentions to buy homes and cars have declined over a six-month moving average basis. Write-in responses to The Conference Board’s survey underscored ongoing apprehensions about inflation and trade policies. Consumers frequently cited these factors alongside broader economic and policy uncertainties, suggesting that macroeconomic trends heavily influence personal financial decisions. Such insights provide valuable context for understanding shifts in consumer sentiment and spending patterns amidst evolving economic landscapes.