The University of Michigan's Consumer Sentiment Index fell to a record low of 47.6 in April, marking an 11% decline from March. The drop reflects widespread economic pessimism amid rising gas prices and inflation, with all demographic groups reporting lower sentiment. The index combines current economic conditions and future expectations, both of which plummeted this month.
Core Facts
- The Consumer Sentiment Index hit 47.6 in April, the lowest on record, down from 53.3 in March.
- Gas prices surged 21% in March, accounting for three-fourths of the overall monthly inflation increase of 0.9%.
Deeper Context
Economic Impact of the Iran War
The decline in sentiment coincides with the ongoing conflict with Iran, which has disrupted supply chains and driven up energy prices. Joanne Hsu, director of the University of Michigan's surveys of consumers, noted that most interviews were conducted before a temporary ceasefire was announced. She suggested that economic expectations may improve if supply disruptions ease and gas prices moderate.
Inflation and Consumer Expectations
The consumer price index (CPI) rose 0.9% in March, pushing the 12-month inflation rate to 3.3%. Energy prices were the primary driver of this increase, with food inflation remaining stable. Year-ahead inflation expectations jumped from 3.8% in March to 4.8% in April, the largest monthly increase since April 2025.
Demographic and Political Perspectives
The sentiment decline affected all age, income, and political groups. Open-ended survey comments indicated that many consumers blame the Iran conflict for economic challenges. Economists like Oren Klachkin of Nationwide suggest that high gas prices and volatile news headlines are contributing to the downturn, with no immediate recovery expected.
Historical Comparison
The current sentiment level is worse than during the Great Recession and the COVID-19 pandemic. The last comparable low was in June 2022, when inflation hit 9.1% and gas prices spiked amid Russia's war in Ukraine.