Consumer sentiment falls as tariff fears mount

Consumer sentiment plunged 11 percent this month as consumers continue to feel the impact of burgeoning tariffs, according to the University of Michigan Surveys of Consumers. .The index tracking consumer sentiment fell 11 percent to 50.8 from 57.0 in March, and is 34.2 percent lower than 77.2 in April 2024. The index of current economic conditions dropped 11.4 percent to 56.5 from 63.8 in March, and is 28.5 percent lower than 12 months ago. The index covering consumer expectations fell 10.3 percent to 47.2 from 52.6 in March, and is 38 percent lower than 76.0 in April 2024. Consumer sentiment has lost more than 30 percent since December amid increasing worries over trade war developments, according to the survey. “This decline was, like the last month’s, pervasive and unanimous across age, income, education, geographic region and political affiliation,” said Director Joanne Hsu. Expectations for business conditions, personal finances, income, inflation and labor markets all fell in March, while the share of consumers expecting unemployment to increase in the coming year rose for the fifth straight month. Year-ahead inflation expectations increased to a 44-year high of 6.7 percent in March from 5.0 percent in February. Long-term inflation expectations increased to 4.4 percent this month from 4.1 percent in March, showing an especially large jump among Independents. The survey was conducted from March 25 to April 8 as President Donald Trump was ramping up tariffs on U.S. trading partners. Though Trump paused most retaliatory tariffs for 90 days on April 9, he has still raised tariffs on goods imported from China to 145 percent. The Conference Board Consumer Confidence Index fell 7.2 points last month to 92.9. The index based on consumers’ assessments of current business and labor market conditions dropped 3.6 points to 134.5. The index tracking consumers’ short-term outlook for business and labor market conditions fell 9.6 points to 65.2, well under the score of 80, which typically signals an upcoming recession.“Consumers’ expectations were especially gloomy, with pessimism about future business conditions deepening and confidence about future employment prospects falling to a 12-year low,” said Senior Economist of Global Indicators Stephanie Guichard. “Meanwhile, consumers’ optimism about future income — which had held up quite strongly in the past few months — largely vanished, suggesting worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations.”