University of Michigan survey shows sharp decline in sentiment as inflation fears and energy costs weigh on households
By yourNEWS Media Newsroom
U.S. consumer sentiment dropped to the lowest level recorded in more than seven decades in early April, as economic concerns tied to the Iran conflict and rising prices weighed heavily on households, according to preliminary data released by the University of Michigan.
The Index of Consumer Sentiment fell to 47.6 from 53.3 in March, a decline of nearly 11 percent. The reading fell below the previous record low of 50.0 set in June 2022 during the post-pandemic inflation surge. The survey period ran from March 24 through April 7, with the majority of responses collected before a temporary ceasefire announcement.
The downturn affected respondents across political affiliations. Among Republicans, sentiment declined from 92.2 to 87.1, with perceptions of current economic conditions dropping nearly 10 points to 79.8, the lowest level since late 2025. Democratic sentiment decreased further to 31.8 from 36.4, while independents recorded a smaller overall decline to 46.7, though their assessment of current conditions showed a slight increase.
Measures of present and future economic outlook both deteriorated. The Current Economic Conditions index fell to 50.1 from 55.8, marking a new low, while the Index of Consumer Expectations dropped to 46.1, its weakest level since 1980. Assessments of personal finances also declined, matching levels last seen during the 2009 financial crisis.
Joanne Hsu, director of the Surveys of Consumers, said the decline was widespread across demographic groups, including age and income categories. She noted that expectations for business conditions over the next year fell sharply, declining about 20 percent to their lowest level since mid-2022.
Survey responses indicated that rising fuel costs and geopolitical uncertainty were key drivers of the shift in sentiment. Gasoline prices climbed above $4 per gallon, reaching levels not seen since 2022, adding pressure to household budgets. Respondents also reported concerns about declining asset values and worsening financial conditions, with personal finance assessments falling approximately 11 percent.
Expectations for inflation increased significantly. One-year inflation expectations rose to 4.8 percent from 3.8 percent in March, marking the largest monthly jump since April 2025. Longer-term expectations also increased, reaching 3.4 percent, the highest level since November 2025.
Separate data released alongside the survey showed continued upward pressure on prices. The consumer price index rose 0.9 percent in March, the largest monthly increase since 2022, largely driven by higher gasoline costs. Food prices were unchanged, while core inflation, which excludes food and energy, rose 0.2 percent for the month and 2.6 percent over the past year.
Hsu indicated that sentiment could improve if conditions stabilize, particularly if supply disruptions linked to the conflict ease and energy prices decline. For now, the data reflects a sharp shift in consumer outlook amid ongoing economic and geopolitical uncertainty.
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