Consumers Haven’t Been This Gloomy Since the Pandemic and the Great Recession

You’d have to go back to the last few seismic shocks to the U.S. economy — the pandemic and the Great Recession — to find this level of economic gloom among consumers.

As measured by the preliminary April reading of consumer sentiment released Friday (April 11) by the University of Michigan, worries over household finances, inflation and the impact of tariffs all weighed on our collective minds.  The 50.8 number tied to overall Consumer Sentiment comes close to the nadirs seen in the past decades, as seen in the accompanying chart.

“This decline was, like the last month’s, pervasive and unanimous across age, income, education, geographic region and political affiliation,” wrote Joanne Hsu, the survey’s director, in remarks that accompanied the release.  Sentiment is more than 30% lower than had been seen at the end of the year, but it’s important to note that the data were collected from the end of March to April 8 — before the stunning, partial delay of tariffs levied by the Trump administration (with the exception of China).

The 50+ levels are flashing red in terms of signaling a recession. The Friday release noted that the share of consumers expecting unemployment to rise in the year ahead increased for the fifth consecutive month, and with the Great Recession as a reference point, that is the highest level of such expectations seen since 2009.

The steady march downward in sentiment is chronicled in the fact that the overall sentiment barometer represents an 11% decline from March, following month-on-month decreases in March (-11.9%), February (-9.8%) and January (-3.1%). If this trend continues through the end of the month, it would amount to a 31.4% loss since the start of the year, the largest four-month decline recorded since the 2000s. The drop in sentiment was widespread and consistent across age groups, income levels, education, regions and political affiliations.

Beyond the overall sentiment,  the subindex measuring future expectations continued its downward trajectory, falling an additional 10% this month after an 18% drop in March.

This growing pessimism about the labor market contrasts sharply with the robust conditions of recent years, when strong employment and rising incomes bolstered consumer spending.

Huge Jump in Expected Inflation

Inflation expectations also surged. Short-term inflation expectations for the year ahead jumped from 5.0% in March to 6.7% in April, the highest level since 1981. This marks four consecutive months of unusually large increases of 0.5 percentage points or more, as defined by the report. Long-term inflation expectations also edged higher, rising from 4.1% in March to 4.4% in April.

The uncertainty noted above, and the worries over inflation have been enough to incentivize consumers to get out in front of their worries and buy what they could, when they could — on the assumption that supply chains and prices were about as good as they would get on the near term.

Indeed, the first swell of earnings reports have borne out that activity. As PYMNTS reported in its coverage Friday of JPMorgan’s earnings report, CFO Jeremy Barnum told analysts, “I think on the consumer side, the thing to check is the spending data, and to be honest, the main thing that we see there is what would appear to be a certain amount of front-loading of spending ahead of people expecting price increases from tariffs.” Despite that sentiment, spending growth slowed a bit, to 7% on credit and debit cards in the first quarter, which ended in March.

The assessment of future conditions may be taking a hit as consumers find it tough to be proactive about their financial states of affairs — they’re reacting rather than formulating longer term strategies. PYMNTS Intelligence reported that of the more than 2,800 consumers surveyed, 40% of consumers identified as planners in January 2025 — a roughly 20% plunge since February 2024, when roughly 1 in 2 were planners.

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