US Consumer Confidence Continued to Deteriorate in April, Inflation Expectations Soared to Levels Unseen in Decades

As Trump's policies caused global turmoil, US consumer confidence data in April fell to the second lowest level on record, while short-term and long-term inflation expectations also surged to multi-decade highs.

Data released by the University of Michigan on Friday showed that the preliminary reading of the University of Michigan Consumer Sentiment Index for April was 50.8, lower than the market expectation of 54.5. Except for the 50 in June 2022, this is the lowest data in the survey since the 1970s.

It is worth noting that the survey was conducted between March 25 and April 8 and was completed before Trump temporarily suspended some tariff policies on April 9.

Sam Tombs, an analyst at Pantheon Macroeconomics, said in a report: "Consumer sentiment has deteriorated from anxiety to panic. Given that the survey was conducted between March 25 and April 8, people may now be even more pessimistic, as some responses may have been received before the sharp decline in US stocks."

Respondents were also more pessimistic about the outlook for the job market, with the proportion of consumers expecting the unemployment rate to rise in the next year reaching the highest level since 2009. In addition, respondents believed that the probability of unemployment in the next five years was the highest since July 2020. Income expectations also deteriorated.

Joanne Hsu, director of the Consumer Survey Center, said: "Unemployment expectations have deteriorated sharply over the past few months. This is widespread and consistent across all ages, incomes, education levels, geographic regions, and political affiliations."

Hsu added: "Consumers reported multiple warning signs, increasing the risk of a recession: expectations for business conditions, personal financial conditions, income, inflation, and the labor market all continued to deteriorate this month."

Recent economic data showed that the job market remained robust as of March, and inflationary pressures were easing. A report released earlier on Friday by the US Bureau of Labor Statistics showed that US PPI inflation in March recorded the largest decline since October 2023, driven by energy costs.

In addition, US CPI inflation in March was below expectations across the board, with core CPI, excluding food and energy costs, at 2.8% YoY, pulling back for the second consecutive month, the lowest level since March 2021.

However, the University of Michigan survey revealed the extent of Americans' concerns about future prices. The report stated that consumers expect the annual growth rate of prices in the next five to ten years to reach 4.4%, the highest level since 1991, up from 4.1% a month ago. They expect inflation expectations for the next year to be 6.7%, the highest level since 1981.

The survey showed that about two-thirds of consumers involuntarily mentioned tariffs during the survey interviews. Since the end of January, the confidence index has fallen by nearly 21 points.