Consumer Sentiment Plummets to Record Low as Inflation Expectations Surge

Concerns over the U.S.-Iran war and rising gasoline prices have sent the University of Michigan’s Index of Consumer Sentiment to its lowest level since data collection began in 1978.

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The index registered a reading of 49.8 in April, down from 53.3 in March, but above the consensus estimate of 48.5. Sentiment slightly improved from the preliminary April figure of 47.6 after the U.S. and Iran reached a ceasefire. “After the two-week cease-fire was announced and gas prices softened a touch, sentiment recovered a modest portion of its early-month losses,” said Surveys of Consumers Director Joanne Hsu.

Consumer Sentiment Falls as Inflation Expectations Jump

The decline in sentiment was reflected across all demographic groups, while expectations of short- and long-term business conditions also took a hit.

Meanwhile, inflation expectations surged higher amid rising oil and gas prices from the closure of the Strait of Hormuz. Consumers now expect year-ahead inflation of 4.7%, up from 3.8% in March and marking the largest monthly jump since President Trump announced sweeping tariffs in April 2025. They also expect long-term inflation of 3.5%, the highest since October 2025.