U.S. Consumer Sentiment Hits Pandemic Low Amid Tariff Fears/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. consumer sentiment dropped sharply in April as Americans grew increasingly worried about job losses and rising inflation amid escalating trade tensions. The University of Michigan index fell 11% to 50.8 — its lowest point since the pandemic. Expectations of unemployment and long-term inflation are also climbing.
Consumer Confidence Crashes: Quick Looks
- Consumer sentiment index fell 11% to 50.8, the lowest since pandemic-era April 2020.
- Drop reflects fears about job security and rising inflation, fueled by Trump’s escalating trade war.
- Sentiment fell across all demographics — age, income, region, education, and political leanings.
- The share expecting higher unemployment is now at its highest since 2009.
- Long-term inflation expectations rose to 4.4%, up from 4.1% last month.
- Inflation fears could complicate Federal Reserve policy, as they risk becoming self-fulfilling.
- Fed Chair Jerome Powell recently called the sentiment survey’s inflation reading an “outlier.”
- Still, growing economic anxiety could push consumers to cut back on spending, softening growth.
U.S. Consumer Sentiment Hits Pandemic Low Amid Tariff Fears
Deep Look
WASHINGTON — American consumer sentiment has taken a steep nosedive, hitting levels not seen since the early days of the COVID-19 pandemic, as fears over job losses and stubborn inflation rise in tandem with President Donald Trump’s intensifying trade war.
According to data released Friday by the University of Michigan, its benchmark consumer sentiment index fell 11% in April to 50.8, a dramatic drop from March and the lowest reading since 2020. It marks the fourth consecutive month of declining confidence.
“The downturn was pervasive and unanimous,” said Joanne Hsu, the survey’s director. “No demographic group was immune — young or old, wealthy or low-income, left or right.”
Jobs Outlook Dims Sharply
One of the most worrisome findings in the report: rising fears of unemployment. The percentage of Americans expecting joblessness to increase in the coming months climbed for the fifth straight month, now reaching its highest point since the 2008–2009 Great Recession.
This change in outlook represents a stark contrast from recent years, when robust labor markets buoyed spending, even as inflation soared and interest rates rose.
“This lack of labor market confidence lies in sharp contrast to the past several years, when robust spending was supported primarily by strong labor markets and incomes,” said Hsu.
Inflation Expectations Rise Again
Another troubling trend: Americans now expect long-term inflation to reach 4.4%, up from 4.1% the previous month. While the Federal Reserve targets a 2% inflation rate, rising expectations can become self-fulfilling, prompting consumers to buy sooner or demand higher wages, ultimately pushing prices higher.
Fed Chair Jerome Powell has downplayed the Michigan survey in the past, calling its inflation expectations “an outlier.” More market-based inflation measures, like those derived from inflation-protected Treasury securities, remain closer to the Fed’s target.
Still, persistent concerns reflected in household expectations may influence future Fed decisions.
Trump’s Trade War Drives Uncertainty
The biggest wildcard in the inflation and jobs equation may be President Trump’s renewed trade war. In April, Trump imposed 145% tariffs on Chinese imports, along with 10% levies on goods from other countries — with the possibility of more to come in 90 days.
Economists warn these tariffs will likely raise costs for manufacturers and retailers, who may pass those costs on to consumers — further fueling inflation at a time when price sensitivity is already high.
“We’re seeing a perfect storm: price pressure from tariffs, weaker job security, and inflation expectations on the rise,” said Sarah House, senior economist at Wells Fargo. “That’s a dangerous combination for sentiment.”
Spending Slowdown Ahead?
In normal times, such a sharp decline in consumer sentiment would signal a slowdown in spending, which makes up nearly 70% of U.S. economic activity. However, in recent years, Americans have shown a willingness to spend through pessimism — often thanks to strong employment numbers and stimulus boosts.
But with the labor market outlook now dimming and tariffs increasing the cost of everyday goods, economists caution that households may soon pull back.
“People are already feeling squeezed,” said Hsu. “Add in job fears, and that’s when spending restraint kicks in.”
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