Consumer sentiment fell sharply in March, with Democrats’ expectations for the economy hitting an all-time low, according to the University of Michigan’s latest consumer sentiment survey, highlighting an unprecedented partisan divide in economic outlook.
The survey’s headline index dropped to 57.9, down from 64.7 in February, reaching its lowest level since November 2022. While sentiment declined across income levels and age groups, Democrats saw the sharpest deterioration, with their expectations index plunging to 28.2—a level lower than during the 2008 financial crisis, the COVID-19 pandemic, or Donald Trump’s first term.
By contrast, Republican expectations remained high at 95.7, marking a 67.5-point gap—the largest partisan divide ever recorded in the survey. Independent voters saw expectations decline to 51.8, putting them closer to Democrats than Republicans for the first time in years.
Democratic Sentiment at Historic Low
At 28.2, the expectations index for Democrats is at its lowest level ever recorded, surpassing prior lows seen during the 2008 financial crisis, the 2016 election of Donald Trump, and the depths of the pandemic recession in 2020.
Historically, consumer expectations tend to track with partisan control of the White House. Republican confidence surged after Trump’s 2016 election, just as Democratic sentiment spiked after Biden’s 2020 victory. However, the current 67.5-point gap far exceeds even the 64.6-point divide in early 2017, when Republican confidence soared following Trump’s first inauguration.
The findings underscore the dramatic contrast in economic perceptions under President Trump’s second term. Republicans remain broadly optimistic, reflecting expectations of lower taxes, deregulation, and business-friendly policies. Democrats, in contrast, have grown increasingly pessimistic, citing inflation, trade policy, and broader economic uncertainty.
Inflation Expectations Reverse Along Party Lines
For most of President Biden’s term, Republicans consistently expected higher inflation than Democrats, aligning with their concerns about government spending and Federal Reserve policy. Those concerns were largely validated by persistent inflationary pressures in 2021-2023.
Now, however, the trend has reversed dramatically. Democrats now expect inflation to rise 6.5 percent over the next year, a sharp jump from prior months. Republicans, by contrast, expect inflation to be just 0.1 percent, signaling an almost total collapse in their concerns about rising prices. Independents expect inflation at 4.4 percent, positioning them closer to Democrats.
This partisan inversion is the sharpest in recent history. From 2021 to 2023, Republicans routinely expressed higher inflation expectations than Democrats. Now, the spread between the two groups has swung to -6.4 percentage points (Republicans minus Democrats), the largest negative gap on record.
Rising Inflation Expectations Drive Concern
The decline in sentiment coincides with rising inflation expectations across all political groups. Consumers now expect prices to rise 4.9 percent over the next year, up from 4.3 percent in February, the highest level since 2022. Long-term inflation expectations jumped from 3.5 percent to 3.9 percent, marking the largest one-month increase since 1993.
Democrats and Independents were the most affected by these inflation concerns, with their expectations indexes falling 24 points and 12 points, respectively. Republicans, while slightly less optimistic than last month, remain far more confident about the economy’s trajectory.
Uncertainty Over Policy and Markets
The survey also found growing unease about government policy, trade, and financial markets. Nearly 48 percent of respondents spontaneously mentioned tariffs as a source of concern, reflecting uncertainty over Trump’s newly announced 25 percent tariffs on imports from Mexico and Canada, along with an additional 10 percent on Chinese goods.
Markets have reflected some of this uncertainty. The S&P 500 rebounded Friday after a volatile trading week, while the U.S. dollar weakened amid speculation about future Federal Reserve policy. Fed officials have signaled that rate cuts could come later this year, but persistently high inflation expectations could complicate their plans.
Consumer confidence has now declined for three consecutive months, with overall sentiment down 22 percent since December. If spending patterns follow sentiment trends, the economy could face weaker consumer demand in the months ahead—even if politics is a major driver of the decline.
