Consumer Sentiment Tanks, Prices Rise, Growth Stalls as Trump’s Illegal and Costly Iran War Pushes Economy to the Brink

Today's University of Michigan Consumer Sentiment dipped to 55.5 in the preliminary March reading, down 2% from 56.6 in February. Year-ahead inflation expectations came in at 3.4%, ending six months of consecutive declines, as consumers see no end in sight to Trump’s illegal war on Iran and chaotic tariff agenda that are sending prices on everyday essentials from energy to food soaring.

The fallout from Trump’s reckless policies goes beyond high prices as overall economic growth stalls. Consumers are strapped as health care premiums continue to spike and the job market plummets. The economy lost nearly 100,000 jobs in February and last quarter’s GDP growth was revised down to a disappointing 0.7%, falling from the 1.4% growth initially reported.

The president has falsely claimed that “the economy is roaring back.” Yet data print after data print shows a spiraling economy. Trump’s relentless missteps have prompted Goldman Sachs to raise its inflation forecast and cut its GDP outlook, putting recession odds at 25%. Despite promising lower prices and a renaissance for American workers, all Trump has delivered is pain and peril.

Groundwork Collaborative's Chief of Policy and Advocacy Alex Jacquez released the following statement:

“President Trump is flooring the gas pedal as he drives our economy over a cliff. As bad as this week’s data is, it understates reality for exhausted consumers who have been hit with even more price hikes caused by the president’s intentional turmoil in the weeks since this data was collected. Instead of working to bring down ever-increasing prices at the pump, the grocery store, and the doctor’s office, the president is betraying working families as his illegal war with Iran stokes inflation.”

BACKGROUND

Consumer sentiment is stuck near historic lows. The index has been below 60 for eight consecutive months and has fallen 23% over the course of Trump’s second term.

Inflation expectations are surging on Trump's war and tariffs. Year-ahead expectations stalled at 3.4%, the same as last month. Trump’s war on Iran is already driving up the price of gasoline and other everyday goods, and his administration is determined to reinstate erratic and poorly targeted tariffs after the Supreme Court ruled against them. The University of Michigan Surveys of Consumers Director Joanne Hsu noted that sentiment among respondents was considerably lower in interviews conducted after Trump’s attacks on Iran began, with many citing rising gasoline prices as a concern.

Consumers are pessimistic about prices, and for good reason. Today's Personal Consumption Expenditures (PCE) report shows that overall prices rose 2.8% between January 2025 and January 2026. Core PCE came in at 3.1%, the highest since March 2024, and has risen for nine of the past 12 months. Working families were already feeling the squeeze before Trump’s war with Iran poured fuel on the inflation fire.

Growth is slowing as rising inflation and labor market declines wreck family budgets. GDP estimates for the fourth quarter of last year were revised down by 50% to just 0.7%. Growth in consumer spending fell considerably from 3.5% in the third quarter to just 2% in the fourth quarter, as working families are forced to pull back as rising prices and labor market contractions squeeze them from all sides.