Christopher Rugaber and Josh Boak, Associated Press
WASHINGTON (AP) – U.S. consumer sentiment plummeted in April in a fourth straight month of decline.
Preliminary readings of the University of Michigan’s closely monitored consumer sentiment index, released Friday, fell 11% to a minimum of 50.8 from the depths of the Covid-19 pandemic. Over the past year, sentiment has fallen 34%.
The decline was “unanimous and unanimous,” said Joan Huss, director of the survey.
The share of respondents who expect unemployment rates to rise in the coming months has increased for five months, and is now the highest in the Great Recession since 2009.
Consumer sentiment is not always a reliable indicator of the economy as a whole, but it can change the mood around how the public feels about presidential leadership. Feelings among Republicans have fallen by 6% over the past month as Trump was teased, and then rolled out a series of aggressive tariffs to enact a 90-day suspension of import taxes on Wednesday.
“Interestingly, it appears that President Trump blames much of the emotional degradation of 67% of respondents who say the government is doing ‘poor work’ in the fight against inflation and unemployment.” “Only 18% say they’re doing ‘good work’. ”
The outcome of previous trade war dramas is baseline tariffs for most countries of 10%, and imports from China are taxed at a total of 145%. Canadian and Mexican goods face tariffs of up to 25%, while imported cars, steel and aluminum are taxed at the same rate. China retaliated on Wednesday with a 125% tariff on US goods.
The Trump administration has suggested it will cut new trade agreements with more than 75 countries over 90 days.
The erosion of America’s confidence is also emerging in financial markets. Investors are selling US debt. The U.S. Treasury 10-year interest rate hit 4.57% in Friday morning trading, up from around 4% at the beginning of the week.
On Friday, the dollar fell to its three-year low against the euro.
A survey of Michigan Sentiment found that people now expect long-term inflation to reach 4.4% from 4.1% last month. This can be of particular concern to the US Federal Reserve. The Fed is paying close attention to inflation expectations as it could potentially self-realize. If people expect prices to rise, they often take steps that can boost prices, such as accelerated purchases or seeking higher wages.
This is a sign that most of this week is considered blip data, indicating that consumer inflation fell to 2.4% per year in March. Most economists believe that inflation is likely to rekindle given the fierce trade war
Americans’ inflation expectations for the next five years are at their highest since 1991, according to forecasting company Capital Economics.
“It appears that households have reached the same conclusion as the market. Tariffs will last a lifetime of damage to the US economy,” said Harry Chambers, assistant economist at Capital Economics, in an email.
Consumer sentiment remains sharply divided by the parties, with a Democrat index of 34.1 and a Republican index of 81.9. However, both recorded sudden drops in April.
Feelings among independents plummeted from 55.7 to 46.8, falling sharply below post-election peak of 70.2. April reading among independents is lower than at any point in Joe Biden’s presidency.
These inflation expectations have been jumping on for several months. At a press conference last month, Federal Reserve Chairman Jerome Powell said the University of Michigan’s measure of inflation expectations is “outliers.” Market-based measures of inflation expectations based on inflation-adjusted Treasury securities remained low near the Fed’s 2% target.
Lower emotions usually suggest that Americans cut their spending, but in recent years consumers have continued to spend despite the darkness. However, the fact that employment concerns are rising can lead to more attention from consumers.
“This lack of trust in the labour market is in contrast to the past few years when robust spending was supported primarily by strong labour markets and revenues,” HSU said.
Original release: April 11, 2025 11:01am EDT
