Consumer sentiment falls to lowest level since postpandemic inflation peak

Consumer sentiment nosedived in April to the lowest level since the peak of the postpandemic inflation surge as President Trump's trade battles shake the global economy.

Sentiment dropped 8.4 percent from March to April and was down 32.4 percent from a year ago, according to the University of Michigan Survey of Consumers, falling to the lowest point since July 2022.

Current economic conditions dropped a “modest” 6.3 percent, while expectation fell by just more than 10 percent to mark an annual decline of 37.8 percent. 

Year-ahead inflation expectations as measured by the survey had increased from a 5 percent annual increase in March to 6.5 percent in April. The Federal Reserve expects inflation to top out at 2.7 percent this year and to subside to 2.2 percent next year. Inflation is currently at a 2.5 percent annual increase, as measured by the Commerce Department.

“Expectations have fallen a precipitous 32 percent since January, the steepest three-month percentage decline seen since the 1990 recession,” Michigan economists said in a Friday release.

They attributed the deterioration in sentiment to Trump’s trade war.

“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,” they wrote.

The U.S. is locked in a standoff with China as it pursues a reset in global trade relations.

Tariffs on China are now 145 percent, and China has enacted triple-digit tariffs on the U.S. in response. U.S.-China trade totaled more than a half-trillion dollars in 2024, with the U.S. importing $439 billion and exporting $144 billion for a trade deficit of more than $295 billion.

The U.S. has also imposed a 10 percent general tariff along with targeted import taxes on autos, lumber, metals and other goods. The total effective tariff rate in more than 25 percent, according to the International Monetary Fund — the highest level in more than a century.

Sentiment among both consumers and businesses has been dropping through Trump’s trade war, with surveys from ISM, the National Federation of Independent Business, and the New York Federal Reserve all registering increased pessimism.