- The University of Michigan’s April consumer sentiment index fell to 50.8, a 10.9% drop from 57.0 in March and 34.2% lower year-over-year, hitting the lowest level since June 2022 amid rising unemployment fears.
- Inflation expectations surged to 6.7% for one year, the highest since November 1981, and 4.4% for five years, up 0.3 points from March, driving stocks down and Treasury yields up post-report.
- Current economic conditions and expectations indices declined to 56.5 (down 11.4%) and 47.2 (down 10.3%) respectively, with annual drops of 28.5% and 37.9%, reflecting deep consumer unease before a 90-day tariff pause was announced.
Consumer confidence in the U.S. plummeted to a near-historic low in April, with the University of Michigan’s mid-month survey registering a consumer sentiment index of 50.8, down sharply from 57.0 in March and a stark 34.2% decline from a year earlier. This reading, the lowest since June 2022 and the second-lowest since the survey’s inception in 1952, reflects growing unease among Americans, driven by inflation expectations that soared to 6.7% for the next year – the highest since November 1981 – and 4.4% over five years, up 0.3 percentage points from March and the highest since June 1991. The data, collected between March 25 and April 8, underscores a broader deterioration in economic perceptions, with fears of unemployment reaching their highest level since 2009.
The survey’s other metrics painted a similarly grim picture. The index of current economic conditions dropped to 56.5, an 11.4% decline from March and 28.5% lower than a year ago, while the expectations measure fell to 47.2, down 10.3% monthly and 37.9% annually, marking its lowest point since May 1980. These declines signal a profound shift in how consumers view both their present circumstances and future prospects, contributing to market reactions that saw stocks turn negative and Treasury yields rise following the report’s release. The numbers suggest that households are bracing for tougher times, despite some market-based indicators showing less concern about imminent inflation.
Adding to the complexity, the survey’s timing – just before President Donald Trump’s announcement of a 90-day pause on aggressive tariffs against numerous U.S. trading partners – may not fully capture shifts in sentiment tied to trade policy. Yet, the specter of tariffs looms large, with prominent Wall Street voices warning that such measures could exacerbate inflation and push the economy toward recession within the next year. Federal Reserve officials have expressed concern that rising consumer inflation expectations, as evidenced by the 6.7% one-year outlook, could become self-fulfilling if spending and saving behaviors adjust accordingly, even though March’s consumer and producer price data indicated easing pressures.
The University of Michigan’s findings highlight a disconnect between consumer pessimism and certain economic signals, raising questions about the trajectory of growth and stability. The 10.9% monthly drop in sentiment, far exceeding the Dow Jones estimate of 54.6, suggests that fears of inflation and economic slowdown are deeply rooted, potentially influencing policy debates and market dynamics in the months ahead. As consumers grapple with these uncertainties, their eroded confidence could shape the broader economic landscape, challenging efforts to maintain stability in an already volatile environment.
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