US consumer sentiment plummeted in April after Donald Trump’s trade war threw the global economy into chaos, according to a new report.
The index of consumer sentiment, a score based on a monthly survey asking Americans about their financial outlooks, fell by 32% since January – the largest drop since the 1990 recession, according to the University of Michigan’s Institute for Social Research.
“Expectations worsened for vast swaths of the population across age, education income and political affiliation,” said Joanne Hsu, director of the surveys of consumers, in a statement. “Consumers perceived risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead.”
In April, the index of consumer sentiment fell to 52.2, down from 57 in March. The last time the index fell below 55 was in the summer of 2022, when inflation rose to 9%.
Consumer expectation of inflation also skyrocketed from 5% in March to 6.5% in April, the highest it’s been since 1981.
It’s a sign that, despite his insistence that tariffs will “make a lot of money” and haven’t yet raised prices, Trump still hasn’t convinced many Americans that his tariffs will actually work.
Trump’s trade policies have scared investors, causing sell-offs in stock and bond markets. The president softened his tone earlier this week on his trade war with China after a volatile few weeks. Markets rallied after Trump said that his Chinese tariffs “will come down substantially”, though he also warned that “it won’t be zero.”
But Wall Street tends to be more reactive than consumers, who have shown four straight months of declining sentiment on the economy. Even after Trump paused the highest of his reciprocal tariffs, causing stock markets to rise, consumer inflation expectations still remained much higher compared to March.
Higher inflation expectations have also been paired with consumers anticipating slower income growth for the year ahead, meaning that more of them will be hesitant to spend in the months ahead – which all could ultimately mean a slowdown in the economy.
“Without reliably strong incomes, spending is unlikely to remain strong amid the numerous warning signs perceived by consumers,” Hsu said.
