In April 2025, U.S. consumer sentiment experienced a significant decline, with the University of Michigan's Consumer Sentiment Index dropping to 52.2 from 57.0 in March. This marks the fourth consecutive monthly decrease and represents a 32% decline since January, the steepest three-month drop since the 1990 recession.
The decline is attributed to growing concerns over inflation and trade policies. Short-term inflation expectations rose to 6.5%, the highest since 1981, while long-term expectations increased to 4.4%. Approximately 60% of consumers mentioned tariffs as a concern, up from 44% in March, reflecting widespread unease across political affiliations.
Labor market expectations also deteriorated, with nearly two-thirds of consumers anticipating higher unemployment in the coming year, double the percentage from six months prior. Additionally, less than half expect their incomes to grow, and two-thirds foresee a decline in their purchasing power.
The sharp decline in consumer sentiment underscores the impact of policy uncertainty on public confidence. The combination of tariff concerns, inflation fears, and labor market anxieties suggests potential challenges ahead for the U.S. economy, emphasizing the need for clear and consistent economic policies to restore consumer confidence.