Inflation expectations jump to highest level in months
Consumer confidence in the United States fell to a record low in April as fears over rising energy prices and the broader impact of the Iran war weighed heavily on the public, according to a University of Michigan survey released Friday.
The university’s headline index of consumer sentiment dropped to 47.6, a 10.7% decline from the March reading. Both the current conditions and expectations indexes also posted double-digit monthly declines.
The slump in confidence came alongside a sharp rise in inflation expectations. Survey respondents projected prices to climb 4.8% over the next year – a full percentage point higher than the March reading and the steepest outlook since August 2025. The one-year inflation outlook stood at 6.5% in April 2025, following president Donald Trump’s “liberation day” tariff announcement. The five-year inflation outlook also edged up 0.2 percentage points to 3.4%, though it remained a full percentage point below year-ago levels.
Conflict concerns drag on public outlook
Survey director Joanne Hsu said comments from respondents “show that many consumers blame the Iran conflict for unfavorable changes to the economy.” However, Hsu noted that most interviews were completed before the April 7 ceasefire, meaning the survey largely reflected conditions from March, CNBC reported.
“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,” Hsu said.
The survey results arrived shortly after the Bureau of Labor Statistics reported that its all-items Consumer Price Index rose 0.9% in March, lifting the 12-month inflation rate to 3.3%. BLS officials attributed most of the monthly increase to the surge in energy prices, while food inflation remained largely unchanged.
The April reading extended a prolonged slump in consumer confidence that had been building throughout 2025 and into the new year. The University of Michigan’s Consumer Sentiment Index had already fallen to 53.3 in March, down from 56.6 in February, placing sentiment near record lows observed at the end of 2025, with declines spanning all age groups and political affiliations.
Hsu noted that sentiment had been “very, very low near historic lows for most of 2025 and for the first few months of this year” and that incoming data on consumer spending from the fourth quarter and first quarter “have shown weakness as well.”
The New York Federal Reserve’s Survey of Consumer Expectations for March, released last week, also highlighted the deteriorating outlook. Median inflation expectations rose 0.4 percentage points to 3.4% at the one-year horizon, while the mean probability that the unemployment rate would rise within a year climbed 3.6 percentage points to 43.5%, the highest reading since April 2025.
