April's Consumer Sentiment Is the Lowest on Record — Update

By Matt Grossman

Anxiety about the war in Iran has left Americans in the grimmest economic mood on record, according to a long-running survey.

The University of Michigan's consumer-sentiment index dropped to 49.8, from 53.3 last month. That is below the previous low of 50 seen in June 2022, when shoppers faced searing inflation, and the worst reading in the more than 50-year history of the Michigan survey. A preliminary April reading of 47.6 published two weeks ago suggested the survey would deliver bad news this month.

People across different ages, income levels and political opinions reported lower sentiment in April, the survey's director, Joanne Hsu, said. Responses later in April turned more positive after the U.S. and Iran agreed to a two-week ceasefire.

Between stubborn inflation, a frustrating job market and political tensions in the U.S. and abroad, it isn't surprising that many Americans are on edge. But the depths of despair on view in the survey are curious. April's reading shows that perceptions of the economy are darker now than even during previous crises like the Covid-19 pandemic, the 2008-09 financial meltdown and the relentless inflation of the late 1970s.

Despite the sour mood consumers are reporting, there has been little sign that their spending has waned. April data aren't available yet, but U.S. retailers notched solid sales gains in March. Major banks posting their first-quarter earnings have reported household finances are holding up well.

Consumers' expectations of inflation in the year ahead surged versus their March outlook. There was a more modest rise in forecasts of inflation over the next three and five years. Officials at the Federal Reserve watch long-run inflation expectations closely, because higher expected inflation could be a sign the central bank is losing credibility as a warden of stable prices.

In an interview, Hsu said that pervasive, downbeat social-media feeds have probably contributed to darker survey results over the past five years. She said that the survey's zigs and zags provide useful indications of how consumers are reacting to headlines.

"There's been a level shift down in how people view the economy," Hsu said. "We're still seeing month-to-month fluctuations that make complete sense."

Some economists and policymakers say they routinely consult consumer surveys even if they take the results with a grain of salt. The Michigan survey "hasn't tracked closely with actual spending in recent years, [but] I still find the signal from the data meaningful," Christopher Waller, a top Fed official, said in a speech earlier this month.

A more objective look at the state of the economy arrives Thursday, when the Commerce Department is set to release its earliest estimate of economic growth in the first three months of 2026.

Write to Matt Grossman at matt.grossman@wsj.com

(END) Dow Jones Newswires

April 24, 2026 11:16 ET (15:16 GMT)