US consumer confidence dips to lowest Level in 2026 amid Iran war

US consumer sentiment fell in March, hitting its lowest reading this year as households grappled with the economic fallout from the ongoing US-Israeli war with Iran, according to preliminary data released Friday by the University of Michigan Surveys of Consumers.

The Index of Consumer Sentiment dropped to 55.5 in March, down from February's final reading of 56.6 and 2.6% below the level from March 2025. The decline marked a three-month low despite some improvement prior to the conflict.

Survey director Joanne Hsu noted that early interviews showed gains, but sentiment weakened sharply after the US and Israel waged a military campaign against Iran on February 28, with higher gasoline prices delivering the most immediate impact.

The Current Economic Conditions Index rose modestly to 57.8 from 56.6 in February but was 9.4% lower than in March last year. The Index of Consumer Expectations fell more sharply to 54.1 from 56.6 last month, signaling growing pessimism about the future.

Expectations for personal finances declined broadly by 7.5% nationwide, affecting consumers across income levels, age groups and political affiliations.

Meanwhile, year-ahead inflation expectations stabilized at 3.4%, halting six consecutive months of declines. The figure remains elevated compared to 2024 levels and well above the 2.3%-3.0% range seen in the two years before the COVID-19 pandemic.

"Going forward, any tightening in world energy markets will provide further upward pressure on gas price expectations and will likely push overall inflation expectations higher as well," Hsu said.