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Consumer Sentiment Drops to Record Low
March Index Falls to 47.6 From 53.3 in March
U.S. consumer sentiment fell in recent weeks to a record low, indicating Americans’ increasing worries about mounting inflation due to the Iran war.
The preliminary April sentiment index slumped to 47.6 from 53.3 in March, according to the University of Michigan data out April 10. The survey period includes responses from March 24 to April 7. That was below all but one estimate in a Bloomberg survey of economists.
Consumers expect prices to rise at an annual rate of 4.8% over the next year, jumping a percentage point from March in the biggest advance since President Donald Trump announced sweeping tariffs a year ago.
They saw costs rising at an annual rate of 3.4% over the next five to 10 years, up slightly from a month earlier.
Gasoline prices, well above $4 a gallon and the highest since 2022, could persuade consumers to cut back on discretionary spending. Such an erosion of purchasing power risks slowing the economy at a time when employment prospects are limited and Americans are already anxious about a high cost of living.
The current conditions gauge slid to a record-low of 50.1 in April, while the expectations index declined to the weakest since 1980. Consumers’ perceptions of their current financial situation matched the worst since 2009. The outlook for business conditions over the next year fell to the lowest since mid-2022.
“Comments show that many consumers blame the Iran conflict for unfavorable changes to the economy,” Joanne Hsu, director of the survey, said in a statement. “Economic expectations will likely improve after consumers gain confidence that the supply disruptions stemming from the Iran conflict have ended and gas prices have moderated.”
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While a temporary ceasefire between the U.S. and Iran is in place, it’s tenuous and oil flows from the Middle East remain disrupted. Even if a broader peace deal is reached, analysts have cautioned global shipping and energy markets could take months to normalize.
Economists expect fuel and fertilizer costs to filter through to the consumer in the months ahead, including higher grocery bills.
Separate data out April 10 illustrated the initial impact of the conflict. The consumer price index rose 0.9% in March, the biggest increase in nearly four years, reflecting a record increase in gasoline prices.
