Consumer Sentiment Hits Lowest Level Since June 2022 Amid Rising Inflation Concerns

Consumer sentiment in the United States has plunged sharply, falling to a reading of 50.8 in April, marking a significant decrease from March's 57.0 and well below the anticipated Dow Jones estimate of 54.6. This represents a staggering 10.9% decline from the previous month and a 34.2% drop year-over-year, signaling growing concerns among consumers about the state of the economy. This drop is particularly alarming as it is the second lowest in the survey’s history since 1952. The University of Michigan survey has sparked worries over inflation, with respondents now forecasting an inflation rate of 6.7% for the upcoming year—the highest expectation since November 1981. In the five-year outlook, inflation expectations have risen to 4.4%, indicating a persistent fear of rising prices that many consumers associate with reduced purchasing power and economic stability. Further compounding these sentiments, the survey's current conditions index fell to 56.5, down by 11.4% from the previous month, and expectations for future economic conditions dropped to 47.2—a decrease of 10.3% and the lowest reading since May 1980. Across all demographics, there is a palpable fear of job loss, with unemployment worries at their highest level since 2009. Economists are closely monitoring these shifts in consumer sentiment, suggesting that heightened inflation and fears of an economic downturn could foreshadow a recession. Commentary from experts points to the critical view that American consumers have shifted from anxiety to outright fear, a shift described by Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. Despite contrasting market indicators that suggest limited inflation worries, these consumer surveys hint that significant shifts in sentiment could quickly materialize into economic behavior, further reflected in recent volatility in stock markets and rising Treasury yields. As the deadline on President Trump's aggressive tariffs approaches, market participants remain wary of the potential impacts on inflation and economic growth.