Market looks past consumer concerns

The University of Michigan said consumer sentiment fell 6% in March from February levels. We can blame inflation fears for much of that decline. Consumers now expect 3.8% inflation over the next year, up from the 3.4% targeted a month ago.

Over the last seven months, the consumer-sentiment index has traded in a fairly narrow — and unusually low — range. The index took a dive last year and came within 2% of setting a new record low in November 2025. In each of the last seven months, and in nine of the last 12 months, the index has ranked in the bottom 7% of all readings since 2008. Consumers have sweated over inflation, interest rates, recession fears, a slowing job market, and now worry about the effects of conflict in the Middle East.

However, poor consumer sentiment has yet to weigh on spending. Both the economy and financial markets can do well during periods when consumers worry. In fact, the concept of the wall of worry is predicated on the market’s penchant to keep rising even when conditions look bad, as investors rise above their fears.