University of Michigan Releases Final Results of Its Consumer Sentiment Index for April

On Friday, the University of Michigan released the final results of its Surveys of Consumers for April.

• The Index of Consumer Sentiment declined to a reading of 52.2 in April, down from 57.0 in March. This is a month-over-month decline of 8.4% and a 32.4% decrease year-over-year (77.2 in April 2024).
• Current Economic Conditions fell to 59.8 in April, down from 63.8 in March. This is a 6.3% month-over-month decline and 24.3% lower than a year ago (79.0 in April 2024).
• The Index of Consumer Expectations declined to 47.3 in April, down from 52.6 in March. This is a month-over-month decrease of 10.1% and down 37.8% from April 2024 (76.0).

In a statement accompanying the results, Surveys of Consumers Director Joanne Hsu said:

“Consumer sentiment fell for the fourth straight month, plunging 8% from March. While the April decline in current conditions was modest, the expectations index plummeted with drop-offs in personal finances as well as business conditions. Expectations have fallen a precipitous 32% since January, the steepest three-month percentage decline seen since the 1990 recession. While this month’s deterioration was particularly strong for middle-income families, expectations worsened for vast swaths of the population across age, education, income, and political affiliation. 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. Labor market expectations remained bleak. Even more concerning for the path of the economy, consumers anticipated weaker income growth for themselves in the year ahead. Without reliably strong incomes, spending is unlikely to remain strong amid the numerous warnings signs perceived by consumers.

Year-ahead inflation expectations surged from 5.0% last month to 6.5% this month, the highest reading since 1981 and marking four consecutive months of unusually large increases of 0.5 percentage points or more. This month’s rise was seen across all three political affiliations. As seen in the chart, inflation expectations evolved with major trade policy announcements this month. After the April 9 partial pause in tariff increases, inflation expectations ebbed but remained substantially elevated relative to March. Long-run inflation expectations climbed from 4.1% in March to 4.4% in April, reflecting a particularly large jump among independents.”