The University of Michigan's final Index of Consumer Sentiment for April registered 49.8, down 3.5 points from March and 11.7 points from January's reading. The level is now within striking distance of the all-time low of 50.0 set in June 2022 at the peak of the post-pandemic inflation surge. The Current Conditions sub-index slid to 53.6 from 56.5, while the Expectations sub-index fell to 47.3 from 51.2.
Survey director Joanne Hsu attributed the slide to a combination of higher gasoline prices, geopolitical uncertainty surrounding the Iran conflict, and equity-market gyrations earlier in the month. The one-year inflation-expectation reading climbed to 4.7%, the highest since November 2022, while the five-year-ahead expectation jumped to 3.6%, the highest since 1991.
A Disconnect From Hard Data
The headline consumer-sentiment slide stands in sharp contrast to U.S. retail and food-service sales, which rose 1.7% in March from February — the fastest monthly pace since March 2025 — driven by spending on gasoline, autos, and grocery staples. Initial jobless claims for the week ending April 19 came in at 213,000, well below the 240,000 consensus, signaling a labor market that remains resilient. The unemployment rate held at 4.1% in March.
The split between soft-data sentiment indicators and hard-data spending readings is a phenomenon that frustrated forecasters during the 2022-2023 cycle. Bank of America economist Aditya Bhave noted in a Sunday client note that "consumers say they feel terrible but continue to spend; the gap usually closes in the direction of the hard data, not the surveys."
Policy Implications
For the Federal Reserve, deteriorating sentiment combined with higher inflation expectations is a problematic mix. Five-year inflation expectations at 3.6% now exceed the FOMC's 2% target by the widest margin in three decades. Fed funds futures still imply only 8 basis points of cumulative easing through year-end. Several FOMC voters, including Cleveland Fed's Beth Hammack and Dallas Fed's Lorie Logan, have publicly argued the next move could plausibly be a hike.
Outlook
The next major sentiment update is the Conference Board Consumer Confidence print, due Tuesday at 10 a.m. ET. Consensus expects 92.5, down from 94.8 in March. A reading below 90 would all but cement the narrative of a "mood recession" alongside positive economic activity. Personal-spending data on Friday and the May 2 nonfarm-payrolls release will be the next milestones for investors trying to reconcile the sentiment-data divide.