Confidence among American consumers has never been this depressed in the history of the University of Michigan survey.
The preliminary April consumer sentiment index crashed to 47.6 — an all-time record low, an 11% monthly plunge and a sharp miss against the 52 consensus — as the Iran war’s economic fallout spread from the gas pump into households’ broader outlook on their finances, jobs and the future.
Chart: Worst Consumer Confidence Reading Since Records Began
Consumer Surveys For April 2026: Full Breakdown
| Indicator | April 2026 | March 2026 | April 2025 | MoM Change | vs. Consensus |
|---|---|---|---|---|---|
| Consumer Sentiment | 47.6 | 53.3 | 52.2 | –10.7% | MISS vs. 52.0 |
| Current Economic Conditions | 50.1 | 55.8 | 59.8 | –10.2% | — |
| Consumer Expectations | 46.1 | 51.7 | 47.3 | –10.8% | — |
| 1-Year Inflation Expectations | 4.8% | 3.8% | 5.3% | +100bps | BEAT vs. 3.8% |
| 5-Year Inflation Expectations | 3.4% | 3.2% | — | +20bps | — |
Iran War Didn’t Raise Prices. It Raised What People Expect Prices To Do
Aside from the shocking sentiment headline in Friday’s data, the inflation expectations component also negatively surprised.
Year-ahead inflation expectations surged from 3.8% in March to 4.8% in April, a 100-basis-point jump in a single month, blowing past the 4.2% consensus and marking the largest one-month increase since April 2025.
The current reading now exceeds every 2024 reading and sits well above the 2.3%–3.0% range that prevailed in the two years before the pandemic.
Five-year inflation expectations ticked up from 3.2% to 3.4%, the highest reading since November 2025 — but held more contained than the short-run surge, a distinction that carries real meaning for the Federal Reserve.
Chart: Americans Expect 4.8% Inflation Next Year Fed Targets 2%
‘Consumers Are Loud And Clear’
Speaking on Bloomberg TV Friday, Joanne Hsu, director of the University of Michigan Surveys of Consumers, said the collapse in confidence was not a surprise given the morning’s CPI data.
“Consumers are speaking loud and clear,” Hsu said.
“They are very, very frustrated by the persistence of high prices, and they’re feeling very weighed down with the cost of living.”
She noted the report was “not much of a surprise, particularly given this morning’s CPI print, which consumers had already incorporated” — pointing specifically to “this 25% increase in gas prices” at the pump as the central weight on household psychology.
Friday’s CPI report, released earlier in the morning, showed headline inflation jumping 0.9% month-over-month in March — the steepest monthly rise since June 2022 — driven by a 21.2% surge in gasoline, the largest monthly increase since the Bureau of Labor Statistics first published the series in 1967.
Regular gasoline nationally now averages $4.153, up 39% from $2.98 the day before the war started.
The United States Gasoline Fund LP (NYSE:UGA) – which tracks wholesale gasoline prices – has rallied 35% since the war started.
Hsu drew a clear line between the short-run panic and the longer-run picture.
“Their short-term outlook has deteriorated quite a bit, but there is a glimmer of hope — the long-term outlook did not sour nearly as much as the short run did,” she said.
On the five-year measure specifically, Hsu cautioned against reading too much into the relative stability: “I don’t think that people should hold on to this 3.4% five-to-ten year inflation expectations number as something that is definitively going to keep going for the foreseeable future — depending on how things look with geopolitical events and supply disruptions, this could very well change quite quickly in the months ahead.”
Why The Fed Cannot Ignore This
Hsu made the forward-looking case for why sentiment surveys deserve as much attention as hard economic data.
“Our data is really showing something forward-looking, whereas what we often call hard data is always backward-looking,” she said. “We are taking a pulse of what consumers are feeling right now.”
She noted that sentiment has been “very, very low near historic lows for most of 2025 and for the first few months of this year” and that incoming data on consumer spending from the fourth quarter and first quarter “have shown weakness as well.”
According to Hsu, “consumers’ feelings about the economy are passing through to the decisions that they make — it may not be a massive pullback, but it is starting to pull back.”
The Federal Reserve faces a compounding problem. Core CPI came in at a contained 0.2% month-over-month in March, offering some technical relief and indicating that the Iran war is mostly an energy-driven inflation, for now.
But the Michigan data show consumers are not anchoring on the soft-core number.
They are anchoring on the $4.15 gallon of gasoline and the 4.8% inflation they expect to be paying over the next twelve months.
When what consumers experience and what they expect diverges this sharply from the measure the Fed officially monitors, the central bank’s communication task becomes significantly harder.
Image: Shutterstock
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