U.S. Consumer Sentiment Hits Record Low in April
U.S. consumer sentiment dropped to a new all-time low in April, highlighting growing concerns about the economic impact of the Iran conflict. While a temporary ceasefire offered some relief, it was not enough to fully restore confidence among households.
According to the University of Michigan Surveys of Consumers, the final reading of the consumer sentiment index fell to 49.8 in April, down from 53.5 in March. However, the figure came in slightly above the preliminary estimate of 47.6.
Historic Weakness Across All Demographics
This marks the lowest level ever recorded in the long-running survey, falling below the previous low of 50 seen in June 2022. The decline in sentiment was broad-based, affecting consumers across income levels, age groups, education backgrounds, and political affiliations.
Survey Director Joanne Hsu noted that expectations for business conditions have also weakened, both in the short and long term. These readings are now approaching levels last seen during the economic uncertainty tied to trade policy shifts under Donald Trump.
Ceasefire Offers Limited Relief
A temporary pause in hostilities between the U.S. and Iran, which was later extended indefinitely, helped ease some pressure on fuel prices. This provided modest support to consumer sentiment after earlier declines in April.
However, the broader economic concerns tied to the conflict remain unresolved, limiting any meaningful recovery in confidence.
Oil Prices and Inflation Concerns Drive Sentiment Lower
The closure of the Strait of Hormuz following military escalation earlier this year triggered a sharp rise in oil prices. This has raised fears of renewed inflation and slower global economic growth.
In the U.S., gasoline prices surged, at one point exceeding $4 per gallon nationwide. This increase played a significant role in accelerating inflation pressures during March.
Inflation Expectations Climb Sharply
Rising fuel costs have had a direct impact on inflation expectations. Consumers now expect prices to increase by 4.7% over the next year, up from 3.8% in March. This marks the largest monthly jump since April 2025.
Long-term inflation expectations have also moved higher, reaching 3.5% in April — the highest level since October 2025.
Energy Prices Key to Consumer Confidence
According to Hsu, the Iran conflict is influencing consumer sentiment primarily through its impact on energy prices, particularly gasoline. Without a meaningful reduction in energy costs or easing of supply constraints, improvements in sentiment are likely to remain limited.
