U.S. consumer sentiment plunged 8% in April, marking one of the lowest readings since records began in 1952, according to new data from the University of Michigan. The final reading of 52.2 reflects growing anxiety over the economy, with fears of inflation and a potential recession clouding public confidence—even after President Donald Trump delayed a planned tariff hike earlier this month.
Confidence Near Historic Lows
This latest drop in consumer sentiment is the fourth-lowest monthly reading in over 70 years. Survey director Joanne Hsu emphasized that the deterioration was widespread, hitting Americans of all income levels, political affiliations, and age groups. Middle-income households saw the steepest declines.
“Consumers perceived risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead,” said Hsu in a statement.
Trade Policy Sparks Economic Anxiety
The sharp decline comes just weeks after President Trump paused his aggressive tariff hike, which had targeted dozens of countries. While this move temporarily eased market jitters, the underlying unease remains. Americans continue to fear that rising costs—especially from imports—could fuel inflation, while tariff volatility disrupts hiring and business investment.
Economists warn that this combination of uncertainty and weakening sentiment could lead consumers to pull back on spending, a key driver of U.S. economic growth.
Will Spending Hold Up?
While sentiment has dropped, actual consumer spending remains strong for now. Fed Chair Jerome Powell recently noted that Americans often continue spending even when surveys show pessimism. However, today’s economy looks different from previous years—savings have dried up, student loan payments are resuming, and the job market is cooling.
That raises concern among economists who say weaker confidence could soon translate into slower growth if hiring stalls or inflation returns.
Inflation Expectations Rise
Adding to worries, the University of Michigan survey showed that Americans now expect prices to rise 6.5% over the next year, the highest jump in inflation expectations since 1981. That figure far exceeds the Federal Reserve’s 2% inflation target and could pressure the Fed to stay aggressive with interest rates, despite cooling inflation in recent months.
Economic Outlook: Uncertain and Fragile
Though unemployment remains low and GDP growth is holding, cracks are starting to appear. Business leaders say confusion over Trump’s shifting trade policies is making long-term planning difficult. And with consumer confidence weakening, the risk of a slowdown is rising.
Economists now estimate a 45% chance of a U.S. recession within the next 12 months, according to Bloomberg. If consumer sentiment continues to slide and inflation picks back up, the odds could increase.
“The U.S. economy is pointed in a bad direction,” warned Bill Adams, Chief Economist at Comerica Bank. “The further it goes, the higher the risk of a recession.”
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