Consumer sentiment hits lowest reading of the year in early March amid Middle East war

Brooke DiPalmaFri, March 13, 2026 at 3:06 PM UTC

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The conflict in Iran and resulting higher gas prices weighed on Americans' views of the overall economy, according to a preliminary reading of consumer sentiment in March.

The University of Michigan's Index of Consumer Sentiment showed sentiment at 55.5 in an early March reading, down 1.9% from last month and below last year's level of 57. The decrease was greater than the 54.8 reading economists expected and marked the lowest reading so far this year.

The survey ran from Feb. 17 to March 9, meaning it was half-completed when the US-Israeli strikes on Iran began. Interviews completed after the start of the US military conflict wiped out the improvements in consumer sentiment recorded before the war, University of Michigan surveys of consumers director Joanne Hsu said in the release.

Surging crude oil prices due to the closure of the Strait of Hormuz have led to an immediate increase in gas prices, which are expected to stay elevated while the strait remains closed. Gas prices have increased by more than $0.60 on average in the last month alone, per AAA.

"Gasoline prices have exerted the most immediate impact felt by consumers, though the magnitude of passthrough to other prices remains highly uncertain," Hsu said. She added that consumers "across incomes, age, and political affiliation" reported lower expectations for their personal finances, which were down 7.5% nationally.

Read more: What an extended war with Iran could mean for gas prices

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This survey also reflected the Supreme Court's ruling that struck down President Trump's tariffs imposed under the International Emergency Economic Powers Act (IEEPA).

Friday's preliminary reading from the University of Michigan also showed inflation expectations improving further, with year-ahead inflation forecasts stalling at 3.4%, in line with last month's 3.4% reading. That was the lowest level since January 2025, but it remains far higher than the 2.3% to 3% range seen in the two years before the pandemic.

Americans still believe long-term inflation is here to stay but were a bit more optimistic, expecting long-term inflation at 3.2%, down from 3.3% last month.

That view remained above consistent readings below 2.8% in 2019 and 2020.

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Source: “AOL Money”