WASHINGTON (Reuters) – U.S. consumer sentiment plunged in March and inflation expectations soared amid worries that President Donald Trump’s sweeping tariffs, which have ignited a trade war, would boost prices and undercut the economy.
The University of Michigan Surveys of Consumers on Friday said its Consumer Sentiment Index dropped to 57.9 this month from a final reading of 64.7 in February.
Economists polled by Reuters had forecast the index falling to 63.1.
The index has erased all the gains posted in the aftermath of Trump’s election victory in November.
Consumers’ 12-month inflation expectations jumped to 4.9%, from 4.3% in February. Over the next five years, consumers saw inflation running at 3.9% compared with 3.5% in February.
Trump has slapped a raft of tariffs on a wide range of goods from key trade partners like Canada, China and the European Union, who have responded with duties of their own. Some tariffs have been imposed and then suspended for a month.
Trump on Thursday threatened to hit Europe with a 200% tariff on wine, cognac and other alcohol imports. The tariff whiplash and escalation in the trade war has rattled financial markets, sparking a selloff on the stock market, which also contributed to depressing sentiment this month.
A Reuters/Ipsos poll of Americans conducted March 11-12 showed that 57% of survey participants believe Trump’s moves to shake up the economy, which include deep cuts in government spending and mass firings of federal workers, are too erratic, and 53% think the tariff war will do more harm than good.
(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)
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