U.S. consumer sentiment tumbled to an almost three-year low while short- and long-term inflation expectations soared to multi-decade highs on growing tariff concerns.
The preliminary April sentiment index slid 6.2 points to 50.8, the second-weakest reading on record, according to the University of Michigan. Economists called for a decline to 53.8, based on the median projection in a Bloomberg survey that had a wide range of estimates.
Results of the Michigan survey were based on interviews from March 25 through April 8, prior to President Donald Trump’s Wednesday announcement of a 90-day pause on higher tariffs for dozens of U.S. trading partners. Duties on China have been subsequently raised to 145%.
Consumers expect prices to rise at an annual rate of 4.4% over the next five to 10 years, the highest since 1991 and up from 4.1% a month ago, data released Friday showed. They saw costs rising 6.7% in the coming year, the highest since 1981. In March, year-ahead inflation expectations stood at 5%.
About two-thirds of consumers spontaneously mentioned tariffs during interviews for the survey, the university said. Since the end of January, the sentiment index has declined nearly 21 points.
“Unemployment expectations have worsened sharply over the last few months, which may not lead to a pull-back in spending if consumers do not expect to be personally affected by layoffs or income losses,” Joanne Hsu, director of the survey, said in a statement. “Alarmingly, though, consumers are now worried that they will be personally affected.”
The survey showed the share of consumers expecting higher unemployment in the coming year rose to the highest since 2009. Moreover, respondents’ saw the odds of losing their job in the next five years at the highest since July 2020. Income expectations also deteriorated.
Prior to news on Wednesday that higher U.S. tariff rates would be dialed back, American consumers had become more alarmed that sweeping tariffs would lead to higher prices.
Trump’s trade policy has roiled markets and intensified consumer anxiety about personal finances and the job market on prospects for a weaker economy. Consumer price index data on Thursday showed inflation unexpectedly cooled in March, though that was prior to the full impact of the tariffs.
The survey showed the current conditions gauge fell to 56.5 from 63.8, while the expectations index decreased to 47.2 — the weakest since 1980.
Consumers’ outlook of their financial situation decreased in April to a fresh record low.
