American consumers are the most pessimistic they have been in 74 years. The University of Michigan’s final April consumer sentiment index came in at 49.8, the lowest reading since the survey began in 1952.
Why it matters: consumer spending accounts for roughly two-thirds of US economic output. A sustained collapse in confidence raises the risk that households cut back enough to tip the economy into recession.
The numbers
The April reading fell 3.5 points from March’s 53.3. The final figure was revised up from a preliminary estimate of 47.6 but still broke the previous record low set during the 2008 financial crisis.
Sentiment declined across all demographics. The drop was consistent regardless of political affiliation, income level, age, or education.
Inflation expectations
Year-ahead inflation expectations jumped to 4.7% from 3.8% in March, the largest one-month increase since April 2025. Long-run inflation expectations climbed to 3.5%, the highest reading since late 2025.
The spike is driven by the Iran war’s disruption to shipping in the Strait of Hormuz. Higher oil prices have pushed up the cost of petrol and diesel across the United States, hitting household budgets directly.
Spending outlook
Economists noted that the correlation between sentiment and actual spending has historically been weak. Consumers often say they feel worse about the economy while continuing to spend.
However, the scale of this decline is different. According to Reuters, economists expect lower-income households in particular to scale back consumption as higher fuel costs erode real disposable income.
What happens next
The Federal Reserve monitors inflation expectations closely because they can become self-fulfilling. If consumers expect higher prices, they may demand higher wages, which in turn pushes prices up further. The next sentiment reading is due in late May.