Consumer sentiment hits record low amid fears over Iran war impact
Consumer sentiment plunged in early April to the lowest level ever recorded in the more than 70-year history of the University of Michigan’s survey.
The Index of Consumer Sentiment’s preliminary reading for April fell to 47.6, down 10.7% from March, extending a decline that began with the start of the Iran conflict. Year-ahead inflation expectations rose to 4.8% this month from 3.8% in March. Comments show that many consumers blame the Iran conflict for unfavorable changes to the economy, according to Joanne Hsu, director, surveys of consumers.
The index of current economic conditions also fell, declining to 50.1, down 10.2% from March. The index of consumer expectations fell to 46.1, down 10.8 from March.
“Demographic groups across age, income, and political party all posted setbacks in sentiment, as did every component of the index, reflecting the widespread nature of this month’s fall,” said Hsu. “Assessments of personal finances declined about 11%, with consumers expressing a substantial increase in concerns over high prices and weaker asset values.”
Buying conditions for durables and vehicles worsened, again on the basis of high prices, added Hsu.
The survey was released on the same day that the Bureau of Labor Statistics reported that its all-items consumer price index rose 0.9% in March, pushing the 12-month inflation rate to 3.3%. BLS officials said most of the increase in the came from the surge in energy prices.
Inflation
Year-ahead inflation expectations surged from 3.8% in March to 4.8% this month, the largest one-month increase since April 2025. The current reading exceeds those seen in 2024 and remains well above the 2.3 to 3.0% range seen in the two years pre-pandemic.
Long-run inflation expectations ticked up from 3.2% last month to 3.4% this month, the highest reading since November 2025. In 2024, values ranged between 2.8% and 3.2%, while in 2019 and 2020, they were consistently below 2.8%.
Year-ahead inflation expectations surged from 3.8% in March to 4.8% this month.
Nearly all — 98% — of the interviews were completed prior to the April 7 announcement of a temporary cease-fire, noted Hsu.
“Economic expectations will likely improve after consumers gain confidence that the supply disruptions stemming from the Iran conflict have ended and gas prices have moderated,” Hsu said.
