Inflation Fears Fade As War Drags UMich Sentiment Lower

After rebounding solidly in January and February, expectations were for a modest decline in UMich Sentiment in preliminary March data and analysts were right but the 55.5 print (from 56.6 prior) was better than the 54.8 expected.

• Current Conditions actually improved, surprising to the upside (57.8 vs 56.6 prior vs 54.9 exp)

• Expectations fell more than expected (54.1 vs 56.6 prior vs 54.5 exp)

Current Conditions are at their highest level since October while expectations are at their lowest since November.

Source: Bloomberg

Interviews for this release were collected between February 17 and March 9, with about half completed after the start of the US military conflict in Iran.

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.

“A broad swath of consumers across incomes, age, and political affiliation all reported declines in expectations for their personal finances, down 7.5% nationally,” according to UMich Surveys Director Joanne Hsu.

Despite the worries noted by UMich about gasoline prices, inflation expectations continued to slide…

With Democrats fear bias continuing to fade…

Note that for both time horizons, interviews completed after February 28th exhibited higher inflation expectations than those completed before that date (see chart, right panel).

If the war is still going on by month-end, expect inflation fears to surge (via the Democrats), because of this nonsense (h/t @MikeZaccardi via FundStrat)

Why did UMich suddenly starting weighting their survey to Democrats when Trump was elected?