Consumers don't like it when they lose money. And the rise in oil prices reduces their spending power. The mid-March reading of consumer sentiment, from the University of Michigan, reflected that concern and declined 12.0% to 68.2 from 77.5 in February. A reading of 76.4 had been expected. During the last ten years there has been an 83% correlation between the level of sentiment and the y/y change in real consumer spending.

The expectations component of consumer sentiment fell the sharpest with an 18.6% m/m decline to 58.3, the lowest level in exactly two years. The decline was paced by a nearly one-quarter drop in expected business conditions during the next five years. That was followed by slightly less of a decline in expected conditions during the next year. The expected change in personal finances dropped 8.8%, again, to the lowest level in two years. The index of current economic conditions fell 3.8% and reversed much of the February gain. The reading of current personal finance dropped 11.0% but buying conditions were seen as having improved slightly.

Expected price inflation during the next year jumped a full percentage point to 5.4% with the surge in oil prices. The latest reading was the highest since July 2008 when energy prices similarly surged. During the next five-to-ten years, inflation is expected to average a lesser, but elevated, 3.7%. Respondents' view of government policy, which may eventually influence economic conditions, reversed nearly all of its February gain. Just 14 percent of respondents thought that a good job was being done by government while while an elevated 40% thought a poor job was being done.

The Reuters/University of Michigan survey data are not seasonally adjusted. The readings are based on telephone interviews with just over 300 households during early-to-mid November. The summary indexes are in Haver's USECON database with details in the proprietary UMSCA database. The expectations figure is in Haver's AS1REPNA database.