The index fell to 50.8, the weakest reading since June 2022. That’s a steep fall from March’s 57 and far below economists’ forecast of 53.8.
Rising concerns over President Trump’s sweeping tariffs appear to be a major driver. Inflation expectations for the year ahead jumped to 6.7% — the highest since 1981. Just a month ago, that number was 4.9%. Back in January, it was 3.3%.
Long-term inflation worries climbed too. Consumers now expect 4.4% inflation over the next five to 10 years, up from 4.1% in March.
The survey, conducted between March 25 and April 8, captured early reactions to Trump’s April 2 “reciprocal tariff” announcement. It did not, however, reflect responses to his 90-day pause on select levies or this week’s hike in China tariffs.
Recession Risks Are Rising, Say Consumers
“Consumers report multiple warning signs,” said Joanne Hsu, director of the University of Michigan’s survey. “Business conditions, incomes, inflation expectations, and labor market outlooks all worsened this month.”
Since December, sentiment has dropped over 30% — a signal that households now view trade policies as a lasting economic threat.
Harry Chambers, assistant economist at Capital Economics, echoed that view. “Households appear to have come to the same conclusion as markets: the tariffs will do lasting damage to the U.S. economy,” he said in a note to clients.
Inflation Data Tells a Slightly Different Story — For Now
Despite growing fear, inflation metrics remain relatively tame. The Bureau of Labor Statistics said core Producer Price Index (PPI) rose 3.4% in April, slightly lower than March’s 3.5%. Core Consumer Price Index (CPI) also cooled, rising 2.8% year-over-year — the slowest pace in four years.
Meanwhile, markets have been rattled. Even after Wednesday’s historic rebound, the S&P 500 remains down over 7% since Trump’s April 2 announcement.
The post U.S. Consumer Confidence Sinks to Two-Year Low as Tariff Worries Mount appeared first on Coindoo.
