Consumer sentiment collapses

U.S. consumer sentiment fell to a record low of 47.6 in early April, the weakest reading in the University of Michigan survey’s history. (sca.isr.umich.edu, usnews.com) The reading dropped from 53.3 in March, a 10.7% monthly slide, and came in below economists’ 52.0 forecast in a Reuters poll. (usnews.com, cnbc.com) Consumers also raised their one-year inflation outlook to 4.8% from 3.8% in March, while five-year inflation expectations rose to 3.4% from 3.2%. (usnews.com) The Michigan survey measures how households feel about their finances, buying conditions and the broader economy. Those attitudes matter because consumer spending makes up roughly two-thirds of United States economic activity. (sca.isr.umich.edu, jstor.org) Joanne Hsu, director of the Surveys of Consumers, said declines showed up across age groups and political parties, with larger drops among middle- and higher-income households and people with stock wealth. (sca.isr.umich.edu, usnews.com) Hsu said open-ended responses showed many consumers blamed the Iran conflict for worsening economic conditions. Reuters reported that almost all responses were collected before a ceasefire agreement reached earlier that week. (usnews.com) That timing matters because the survey was taken as oil prices had jumped more than 30% and the national average gasoline price moved above $4 a gallon for the first time in more than three years, according to Reuters. (usnews.com) Official inflation data released the same day showed consumer prices rose 0.9% in March and were up 3.3% from a year earlier. Gasoline was a major driver of that increase. (bls.gov, cnbc.com) The Federal Reserve’s longer-run inflation target is 2% as measured by personal consumption expenditures, so a 4.8% one-year expectation signals households see price pressures staying well above that goal. (federalreserve.gov) For now, the April survey captures a moment when rising fuel costs, market volatility and war fears hit household expectations all at once. The final April Michigan reading is scheduled for later this month. (sca.isr.umich.edu, usnews.com)