U.S. Consumer Sentiment Dips In March Due To Middle East Conflict

(RTTNews) - Reflecting the conflict in the Middle East and the subsequent jump in gas prices, the University of Michigan released a report on Friday showing a modest deterioration in U.S. consumer sentiment in the month of March.

The University of Michigan said its consumer sentiment index fell to 55.5 in March after inching up to 56.6 in February. Economists had expected the index to edge down to 56.2.

"Interviews completed prior to the military action in Iran showed an improvement in sentiment from last month, but lower readings seen during the nine days thereafter completely erased those initial gains," said Surveys of Consumers Director Joanne Hsu.

She added, "Gasoline prices have exerted the most immediate impact felt by consumers, though the magnitude of passthrough to other prices remains highly uncertain."

The bigger than expected decrease by the headline index came as the index of consumer expectations index slid to 54.1 in March from 56.6 in February.

Meanwhile, the report said the current economic conditions index climbed to 57.8 in March from 56.6 in the previous month.

The University of Michigan also said year-ahead inflation expectations came in unchanged at 3.4 percent in March following six months of consecutive declines. Long-run inflation expectations edged down to 3.2 percent in March from 3.3 percent in February.

"Note that for both time horizons, interviews completed after February 28th exhibited higher inflation expectations than those completed before that date," said Hsu.