Consumer Sentiment Falls for Fourth Straight Month as Inflation Expectations Soar

Consumer sentiment fell for a fourth straight month in April as ongoing economic uncertainty and inflation worries continue to drag down consumer attitudes. The Michigan Consumer Sentiment Index plummeted to 52.2 in April, one of the lowest levels on record. This represents an 8.4% (4.8 point) decline from March but a slightly higher reading than the 50.8 forecast. Furthermore, consumer sentiment has decreased by 32.4% (25.0 points) compared to a year ago, marking the largest annual decline since July 2022.

The Michigan Consumer Sentiment Index is a monthly survey of consumer confidence levels in the U.S. with regards to the economy, personal finances, business conditions, and buying conditions, conducted by the University of Michigan. There are two reports released each month; a preliminary report released mid-month and a final report released at the end of the month.

Joanne Hsu, the director of surveys, made the following comments:

Consumer sentiment fell for the fourth straight month, plunging 8% from March. While the April decline in current conditions was modest, the expectations index plummeted with drop-offs in personal finances as well as business conditions. Expectations have fallen a precipitous 32% since January, the steepest three-month percentage decline seen since the 1990 recession. While this month’s deterioration was particularly strong for middle-income families, expectations worsened for vast swaths of the population across age, education, income, and political affiliation. Consumers perceived risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead. Labor market expectations remained bleak. Even more concerning for the path of the economy, consumers anticipated weaker income growth for themselves in the year ahead. Without reliably strong incomes, spending is unlikely to remain strong amid the numerous warnings signs perceived by consumers.