\n \u201cDeclines were seen across age and political party,\u201d Joanne Hsu, the survey\u2019s director, said in a release. \u201cConsumers with middle and higher incomes and stock wealth, buffeted by both escalating gas prices and volatile financial markets in the wake of the Iran conflict, exhibited particularly large drops in sentiment.\u201d\n <\/p>\n
\n A prolonged war could both jack up inflation and tip the US economy into recession. Gas prices across America have already surged<\/a> since the onset of the conflict.\n <\/p>\n \n Americans\u2019 expectations for inflation in the year ahead posted the biggest monthly increase in about a year, climbing to 3.8% from 3.4% in February, higher than anything seen in 2024.\n <\/p>\n \n However, the respondents in the survey don\u2019t expect higher inflation spurred by the war to stick around over the next five to 10 years, with long-run inflation expectations actually edging lower this month to 3.2%.\n <\/p>\n \n \u201cConsumers may not expect recent negative developments to persist far into the future,\u201d Hsu said. \u201cThese views are subject to change, however, if the Iran conflict becomes protracted or if higher energy prices pass through to overall inflation.\u201d\n <\/p>\n \n That\u2019s reassuring for Federal Reserve policymakers, who pay close attention to people\u2019s perception of prices, particularly over the long run. Long-run inflation expectations serve as a proxy for Americans\u2019 confidence in the Fed\u2019s ability to rein in price increases. The Fed targets 2% inflation on an annual basis, as measured by the Personal Consumption Expenditures price index, which is currently running at 2.8%, as of January.\n <\/p>\n \n Declining consumer sentiment has not translated to weaker spending in recent years.\n <\/p>\n \n Whenever sentiment plummeted after the pandemic \u2014 such as 2022 when inflation was running at a 40-year high or 2023 during a standoff in Congress over the debt ceiling \u2014 Americans continued to open their wallets.\n <\/p>\n \n Consumer spending, which accounts for about two-thirds of the US economy, is more influenced by the state of the labor market; specifically, whether layoffs are rising more than usual or not. While job growth has been anemic<\/a> over the past year, new applications for unemployment benefits remain at historically low levels. And since mid-2023, wage growth has outpaced inflation.\n <\/p>\n ![\"Job](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2026\/03\/gettyimages-2237358966.jpg\")
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