U of Michigan Confidence Falls to Lowest Level Since 1992 and Inflation Expectations Shoot Higher

The preliminary March University of Michigan consumer confidence number only worsened slightly to 70.5, from 70.8 in February. The market had been looking for a steeper decline to 69.5, but this is still the lowest reading in 16 years (1992). Current conditions rose to 84.6 from 83.8, while future expectations eased to 61.4 from 62.4 last month. The one year inflation expectations exploded higher to +4.5% from +3.6%. This will seriously disturb the Fed. On the other hand, the five year inflation expectation eased slightly to 2.9% from 3%. Clearly record food and energy costs are weighing on consumers minds as jobs are being lost. Tightening credit conditions are now feeding through to even those that aren't refinancing mortgages, as credit card lines are being cut for many consumers.