The University of Michigan’s closely watched consumer sentiment index dropped to 47.6, marking a 10.7% decline from March and setting a new historic low. Both the current economic conditions index and the expectations index also posted significant double-digit monthly declines, reflecting widespread pessimism among households.
The deterioration in consumer sentiment coincided with a notable rise in inflation expectations. Survey respondents projected prices to increase by 4.8% over the next year, up a full percentage point from March and the highest reading since August 2025. The data signals growing anxiety about the trajectory of inflation, particularly as energy prices continue to climb.
According to survey director Joanne Hsu, many participants attributed worsening economic conditions to the Iran conflict, citing concerns about supply disruptions and elevated gas prices. However, Hsu noted that most survey responses were collected before the ceasefire announced on Monday, April 7, 2026, meaning the results largely reflect sentiment formed during March when geopolitical tensions were more acute.
Hsu added that consumer expectations could improve if confidence returns in the stability of supply chains and if fuel costs begin to ease in the coming weeks.
The survey findings were released shortly after new data from the Bureau of Labor Statistics showed that the consumer price index rose 0.9% in March, pushing the annual inflation rate to 3.3%. Officials indicated that the increase was driven primarily by higher energy costs, while food prices remained relatively stable.
Longer-term inflation expectations also edged higher, with the five-year outlook rising to 3.4%, a modest monthly increase but still below levels recorded a year earlier. The combined data underscores the fragile state of consumer sentiment as economic uncertainty persists.
