Consumer sentiment fell in April compared to the prior month, hitting a record low, reflecting consumer concerns about gas prices and the economic impact of the Iran war.
The University of Michigan’s final April sentiment index dropped to 49.8 this month from 53.3 in March. This is the lowest final reading for the measure in records going back to 1978. The preliminary mid-month reading, however, was even lower, so there has been some improvement in April.
“After the two-week cease-fire was announced and gas prices softened a touch, sentiment recovered a modest portion of its early-month losses,” Joanne Hsu, the director of the Michigan surveys, said in a statement. “The Iran conflict appears to influence consumer views primarily through shocks to gasoline and potentially other prices. In contrast, military and diplomatic developments that do not lift supply constraints or lower energy prices are unlikely to buoy consumers.”
The unemployment rate is very low and consumer spending was solid in March. Weekly unemployment claims data show that layoffs remain at historically low levels. Headline inflation has been lifted by rising gasoline prices but measures of underlying inflation show no upward pressure. Nonetheless, consumers say they are worried about higher inflation and potential job losses.
Consumers expect inflation to run at an annual rate of 4.7 percent. over the next year. That’s up from 3.8 percent in March but a tick down from the mid-month reading of 4.8 percent. Long-run inflation expectations have also climbed, hitting 3.5 percent in April, the highest reading since October 2025. In the four months prior to the U.S.-Israel attack on Iran, long-run expectations had been around 3.2 percent to 3.3 percent.
The measure of consumer views of current economic circumstances fell 5.9 percent from a month ago. The measure of expected economic developments declined seven percent. Both measures remain above their year-ago level, however.
The decline in sentiment is broad-based, according to Hsu. “Decreases in sentiment were seen across political party, income, age, and education,” Hsu said.
The data show that both the current conditions and expectations metrics declined for Republicans and Democrats. Among independents, however, there was a slight uptick in the current conditions measure, which was more than offset in a decline in the expectations measure.
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