Key insights
- US consumer sentiment hit a record low in April, driven by concerns over the economic impact of the Iran conflict and rising gasoline prices. While a temporary ceasefire offered some relief, the underlying worries about inflation and slowing growth persist. High gas prices contributed to increased consumer price pressures, negatively impacting sentiment and potentially signaling weaker consumer spending.
Investing.com - U.S. consumer sentiment darkened to a new all-time low in April, but was above initial readings, as a temporary ceasefire in the Iran war partially eased -- but did not entirely alleviate -- some household concerns over the economic fallout from the conflict.
The University of Michigan’s Surveys of Consumers said the final reading of its consumer sentiment index fell to 49.8 this month, compared to 53.5 in March. A preliminary gauge had stood at 47.6.
It was the lowest reading in the history of the long-running survey, falling below a prior trough of 50 in June 2022.
Decreases in sentiment were seen across political party, income, age, and education, said Surveys of Consumers Director Joanne Hsu in a statement. Expected business conditions also deteriorated in the short- and long-term time horizons, almost equaling readings from a year ago, when the economy was grappling with the implementation of President Donald Trump’s aggressive trade policies.
Hsu noted that a two-week pause in fighting between the U.S. and Iran, which Trump indefinitely extended this week, led to a softening in gas prices that offered some support to sentiment from its losses earlier in April.
The closure of the Strait of Hormuz following the start of the joint U.S.-Israeli campaign against Iran in late February has caused a spike in oil prices, which have, in turn, fed worries over an inflationary surge and slowing global growth.
In the U.S., a climb in gasoline pump prices has been in sharp focus, with costs at one point rising above $4 a gallon nationwide on average. This jump contributed heavily to an acceleration in U.S. consumer price pressures in March.
"The Iran conflict appears to influence consumer views primarily through shocks to gasoline and potentially other prices. In contrast, military and diplomatic developments that do not lift supply constraints or lower energy prices are unlikely to buoy consumers," Hsu said.
Year-ahead inflation expectations increased to 4.7% in April, up from 3.8% in March, the biggest one-month rise since April 2025. It is well above levels in 2024 and a range of 2.3%-3.0% in the two years prior to the COVID-19 pandemic.
Long-run inflation projections climbed to 3.5% this month, the highest reading since October 2025.