U.S. Consumer Sentiment Drops as Inflation Anxiety Soars on tariff news

U.S. consumer sentiment fell to a more than two-year low and long-term inflation expectations jumped by the most since 1993, illustrating growing apprehension about the economic impact from tariffs.

The preliminary March sentiment index dropped to 57.9, the lowest level since November 2022, from 64.7 a month earlier, according to University of Michigan data issued Friday. The figure 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 0.4 percentage point from the prior month and the highest in more than three decades. They saw costs rising at an annual rate of 4.9% over the next year, up from 4.3% and the highest since 2022.

Consumers’ expectations of their finances dropped to the lowest level on record, the survey showed. Respondents said there was a 48.7% chance that the stock market will increase in the coming year, the lowest probability since May 2023.

Consumers also revised up their expectations for inflation, both for the year ahead and over a five-year horizon. Over the next 12 months, consumers expect inflation to rise to 4.9%, up from a forecast for 4.3% last month. Over the longer run, expectations rose to 3.9% in what was the largest monthly jump since 1993. According to the latest Consumer Price Index report, inflation stands at 2.8%.

“Many consumers cited the high level of uncertainty around policy and other economic factors; frequent gyrations in economic policies make it very difficult for consumers to plan for the future, regardless of one’s policy preferences,” Joanne Hsu, director of the survey, said in a statement.

Forever 21 weighs liquidation

The Los Angeles-based operator of retailer Forever 21 is preparing to potentially close down its stores as part of a bankruptcy filing in the coming days, according to people with knowledge of the matter.

Efforts to find a buyer for the fast-fashion retailer to avoid a liquidation have so far failed, said the people, who asked not to be identified discussing private information. Talks with one potential bidder are ongoing, they said.

At its height, Forever 21 operated more than 500 locations in the U.S. and at least 800 worldwide.

The Forever 21 trademark and intellectual property are owned by apparel and lifestyle label empire Authentic Brands. Authentic plans to continue licensing the brand through new operating and e-commerce partners.

Voice of America ends contracts with AP, Reuters and Agence France-Press

The government agency that runs the Voice of America has moved to terminate contracts with The Associated Press, Reuters and Agence France-Presse, and told its journalists Friday to stop using material from the wire services.

Kari Lake, the former broadcaster turned Republican politician who was selected by President Donald Trump to run VOA, estimated the move would save $53 million.

The new administration has quickly asserted its authority at VOA, which has delivered news from an American perspective to countries across the world. While awaiting official approval to take over, Lake was brought on as special adviser at the U.S. Agency for Global Media, which oversees VOA and sister organizations like Radio Free Europe.

She announced via social media on Thursday that she was ending the “expensive and unnecessary contracts” with the wire services.

“We should not be paying outside news organizations to tell us what the news is,” said Lake.

At many news organizations, audio, video and text reports from wire services are used to supplement reports from locations where the company’s own journalists are not located.

Compiled from Associated Press and Bloomberg reports.