A new report from the University of Michigan’s Institute for Social Research has found that US consumer sentiment plummeted in April, marking the largest drop since the 1990 recession. The index of consumer sentiment fell by 32% since January, with consumers expecting risks to multiple aspects of the economy, primarily due to ongoing trade policy uncertainty.
The survey found that expectations worsened across various demographics, including age, education, and income levels. Inflation expectations surged to 6.5%, the highest level since 1981. Despite President Trump’s claims that tariffs will boost the economy, many Americans remain skeptical, fearing higher prices and slower economic growth.
The decline in consumer sentiment has been persistent, with four consecutive months of declining optimism about the economy. Even after a temporary market rally following Trump’s announcement to reduce Chinese tariffs, consumers’ inflation expectations remained high.
The report suggests that consumer spending may slow down due to reduced income growth expectations, which could ultimately lead to an economic slowdown. As Joanne Hsu, director of the surveys of consumers, stated, “Without reliably strong incomes, spending is unlikely to remain strong amid the numerous warning signs perceived by consumers.”
Source: https://www.theguardian.com/us-news/2025/apr/25/trump-tariffs-trade-war-consumer-sentiment