It’s already quite low:
Figure 1: U.Michigan Consumer Sentiment (blue), Conference Board Confidence Index (brown), Gallup Confidence Rate (green), all demeaned and divided by standard deviation 2021M01-2025m02. Note “Gallup” differs from spread used in previous graphs. Red dashed line at “Liberation Day”. Source: UMichigan, Gallup, Conference Board, and author’s calculations.
Currently, both U.Mich and Conference Board measures are about 1.75 standard deviations below January levels.
What do previous episodes of conflict show?
Figure 2: U. Michigan Consumer Sentiment (blue). NBER defined peak-to-trough recession dates shaded gray. Source: U.Michigan via FRED, and NBER.
In Gulf War I, there’s a period of depressed sentiment, until Desert Storm is executed. There’s only one month of depressed sentiment at the beginning of what was termed Operation Iraqi Freedom. Will these patterns repeat? One caveat: sentiment has never been this low at the onset of a war.
Off topic – The New York Fed has released the results of its latest supplemental regional survey, this one focused on business costs.
“What’s Driving Rising Business Costs?”
From the first paragraph:
“After a period of moderating cost increases, businesses faced mounting cost pressures in 2025. Whiile tariffs played a role in driving up the costs of many inputs—especially among manufacturers—they represent only part of the story. Indeed, firms grappled with substantial cost increases across many categories in the past year…Firms reported that the sharpest cost increases over the past year were for employee health insurance and utilities, followed by business insurance, and goods and materials inputs.”
https://libertystreeteconomics.newyorkfed.org/2026/03/whats-driving-rising-business-costs/
Firms report suppressing wages as a way to cope with rising costs. They also report having difficulty passing cost increases along to consumers. This is a vicious-cycle sort of thing, with wage restraint leading to limited ability to pass cost increases to consumers, leading to wage restraint. Profits, meanwhile, are under pressure.
The goods sector is facing a faster rise in costs than services, mostly because of tariffs.
Ah, and if they are suppressing wages, they would also be suppressing hiring, which might account for the anemic hiring stats over the last year or so…
Yep, consumer sentiment is in for a hit.
Stocks are trading on oil prices, perhaps because Fed rate expectations are trading on oil prices, and oil is up today. A week ago, the July FOMC meeting was priced in as the next Fed rate cut. Today, it’s September. Even the December meeting is priced well away from a sure thing.
Iran’s claim to have hit an oil tanker today has oddly pushed WTI prices up more than Brent (assuming the prices I’m seeing are right).
DXY is up again, following Fed expectations. Treasury yields, too, but not all that much; stock money looking for a place to go?
Baffling was wise to lock in; mortgage rates have given up most of their recent decline. Gas amd mortgage rates up, co sumer sentiment down.
Noem is gone. Trump likes pretty women but not if they have extramarital sex with someone who is not himself. He also likes when someone gives a huge government contract to friends and family – but it has to be his friends and family (not theirs). Finally a big PR campaign for a government agency should not put the face of that agency all over the place – it should be Trumps face. Sorry girl – kissing his ass is not the ONLY rule.
Kristi Noem has been taken out to the gravel pit.
ICE Barbie has joined SHIELD. Nick Fury is not happy.
somebody has to fly that nuke back up through the worm hole as it closes…
Well, now we know Trump’s latest scheme to reduce gas prices. He’s removing sanctions on Russian oil for at least the next 30 days.
And this is how Trump thanks Ukraine for sharing with the US military their expertise in how to intercept Iranian Shahed drones.
I did find that rather wholesome. trump’s solution to oil inflation is to fund the war monger attacking Ukraine. in the longer run, however, I think by allowing India to buy more oil (at an elevated price), he keeps the worldwide economy flowing hot. this simply puts more pressure on the inflation front back at home. he is almost better to let the oil crunch reduce economic activity and provide some level of deflation. he has primed the pumps for more price increases at home, probably not what he envisioned with his action.
the usa is obviously the superior war fighting machine in this conflict (we are not allowed to call it a war). but I think the numerous idiotic decisions that will be made out of the White House will negate much of the positive benefit of curtailing Iranian military capacity. if Russia gets a bump from these new funds, they could expand their war beyond Ukraine, because nato and the usa are distracted in Iran.
Killing 168 school girls is effect of “superior war fighting machine”.
I propose the USA excels at war profiteering.
If it had actual navy tankers could have insurance to transit Hormuz.
Why would you place a girls school adjacent to a military complex? Iran wanted this to occur. The placement of the school was intentional. Just like hamas place underground hq beneath a major hospital.
It appears we have an ayatolla sympathizer amongst us.
Iran wanted this to occur? Baffling is disgusting. 168 elementary school girls killed and the only ones he can blame are the Iranians, who didn’t start this war?
This isn’t WWII carpet bombing from 30,000 feet. These are precision guided bombs with an accuracy of a few meters. The US forces deliberately targeted this particular building with a strike right in the center of the building — twice to make sure it was obliterated. This was no accident. They hit that building dead center because they wanted to.
This was a building used as a civilian school for over a decade. This wasn’t some new thing. Did the US have decades old bad intelligence? Maybe. The Pentagon has said they are using AI in their targeting and AI slop might have occurred — which just illustrates their craven indifference and carelessness. If you aren’t sure what you are shooting at, you don’t shoot unless you are a psychopath.
You dont place a military installation next to an elementary school unless you have decided this outcome is acceptable. The regime in iran decided those children were expendable if needed.
Joseph, you are saying the usa intentionally struck an elementary school to kill those children. That is disgusting and disgraceful.
Nations need to stop hiding military targets within critical civilian infrastructure as a defense policy.
Krasnov has to find some way to cover his butt while he bails out his buddy, Putin. Putin is undoubtedly happy with his work for now.