Consumer sentiment has dropped to an all-time low this month (April) as fears mount over rising energy prices and the broader impact of the war in Iran, according to the latest University of Michigan survey.
The survey’s initial April reading came in at 47.6, down 10.7 percent from its March survey. Analysts polled by The Wall Street Journal were expecting a drop to 52. The April reading is below the previous low point of 50 recorded in June 2022, when the economy was facing searing inflation.
The initial April results are based almost entirely on interviews conducted between March 24 and April 6, before a tentative cease-fire took hold in Iran. The University of Michigan will update the survey with a final April reading later this month, based on more recent responses.
The drop in consumer sentiment coincided with a sharp spike in inflation expectations, with respondents expecting prices to rise 4.8 percent in a year from now, a full percentage point higher than the March reading and the highest since August 2025. The one-year outlook in April 2025 was 6.5 percent following President Trump’s “Liberation Day” tariff announcement.
Joanne Hsu, director of Surveys of Consumers at the University of Michigan, said in a statement, “Consumer sentiment sank about 11 percent this month, extending a decline that began with the start of the Iran conflict, and is currently about 9 percent below a year ago. Demographic groups across age, income, and political party all posted setbacks in sentiment, as did every component of the index, reflecting the widespread nature of this month’s fall. One-year expected business conditions plunged about 20 percent and is now 6 percent below last April. Assessments of personal finances declined about 11 percent, with consumers expressing a substantial increase in concerns over high prices and weaker asset values. Buying conditions for durables and vehicles worsened, again on the basis of high prices. Open-ended comments show that many consumers blame the Iran conflict for unfavorable changes to the economy. Note that 98 percent of interviews were completed prior to the April 7th announcement of a temporary cease-fire. 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.
“Year-ahead inflation expectations surged from 3.8 percent in March to 4.8 percent this month, the largest one-month increase since April 2025 (see chart, black dashed line and black circle). The current reading exceeds those seen in 2024 and remains well above the 2.3-3.0 percent range seen in the two years pre-pandemic. Long-run inflation expectations ticked up from 3.2 percent last month to 3.4 percent this month, the highest reading since November 2025. In 2024, values ranged between 2.8 percent and 3.2 percent, while in 2019 and 2020, they were consistently below 2.8 percent.”
Image courtesy Walmart / Charts courtesy University of Michigan
