U.S. consumer sentiment fell to its lowest level in more than two years and long-term inflation expectations jumped the most since 1993, reflecting growing concerns about the economic impact of tariffs.

A preliminary March sentiment index fell to 57.9, the lowest level since November 2022, from 64.7 a month earlier, according to University of Michigan data released Friday. The reading was weaker than all estimates in a Bloomberg survey of economists.

Consumers expect prices to rise at an annual rate of 3.9% over the next five to 10 years, up 0.6 percentage point from the previous month and the most in more than three decades. They see costs rising at an annual rate of 4.9% over the next year, up from 4.3% and the most since 2022.

As President Donald Trump's tariff policies expand, consumers across the political spectrum are increasingly concerned that additional duties will ultimately lead to higher costs. While inflation eased last month, any sustained increase in price pressures risks causing households to curb discretionary purchases.

Consumers' expectations about their finances fell to their lowest level on record, the survey showed.

"Many consumers cited high levels of uncertainty around policy and other economic factors; frequent changes in economic policy make it very difficult for consumers to plan for the future, regardless of one's policy preferences," Joanne Hsu, the survey's director, said in a statement.

Forty-eight percent of survey respondents spontaneously mentioned tariffs during interviews with the university.

"Most importantly, these consumers generally expect tariffs to generate substantial upward pressure on inflation going forward," Hsu said. The administration's goal is to correct trade imbalances, spur investment in the U.S., and spur domestic production of essential goods and materials. However, consumers see a significant amount of uncertainty in the economy, government policy, and financial markets. The survey showed a gauge of current conditions fell to a six-month low of 63.5. The expectations index fell to its lowest level since July 2022. The Republican sentiment gauge fell nearly 3 points, while the Democrat gauge fell nearly 10 points. Among political independents, confidence fell 5.4 points. (Newsmaker23)

Source: Bloomberg