The figures: In a preliminary April reading, the University of Michigan’s measure of consumer sentiment dropped from 57.0% to 50.8%. Since June 2022, this is the lowest level. Sentiment is down 30% from December and has been declining for four months in a row.
The Wall Street Journal survey of economists predicted a 54.6% reading in April.
The specifics: In April, Americans’ predictions for general inflation over the coming year increased from 5% to 6.7%, the research said. Since 1981, that reading has been the highest.
Inflation forecasts for the next five years increased from 4.1% in March to 4.4%.
According to Fed analysts, firms will find it simpler to raise prices if customers anticipate strong inflation, which will increase pricing pressure.
UMich’s words: Consumers observed “multiple warning signs that raise the risk of recession,” according to UMich survey chair Joanne Hsu. The percentage of consumers who anticipate an increase in unemployment is at its highest level since 2009 and more than double that of November. Prior to the announcement of President Donald Trump’s tariff plan, the survey closed.
Market response: Despite the additional tariffs, stocks SPX and Treasurys BX:TMUBMUSD10Y remained erratic.
