In April, U.S. consumer sentiment reached a new all-time low, although it was slightly improved from initial readings. This shift can be attributed to a temporary ceasefire in the Iran war, which has somewhat mitigated, though not completely resolved, certain household anxieties regarding the economic repercussions of the conflict. The University of Michigan’s Surveys of Consumers reported that the final reading of its consumer sentiment index decreased to 49.8 this month, down from 53.5 in March. A preliminary measure had been recorded at 47.6.

The latest reading marks the lowest point in the history of the long-running survey, dipping below the previous low of 50 recorded in June 2022. According to Joanne Hsu, declines in sentiment were observed across various demographics, including political party affiliation, income levels, age groups, and educational attainment. Anticipated business conditions have similarly worsened in both short- and long-term perspectives, nearly matching the levels observed a year prior, during which the economy faced challenges stemming from the enforcement of President Donald Trump’s assertive trade policies.

Hsu observed that a two-week cessation of hostilities between the U.S. and Iran, which Trump has indefinitely prolonged this week, resulted in a moderation of gas prices, providing some support to sentiment following earlier losses in April. The closure of the Strait of Hormuz, coinciding with the initiation of the joint U.S.-Israeli campaign against Iran in late February, has led to a significant increase in oil prices. This development has subsequently heightened concerns regarding an inflationary surge and a deceleration in global growth. In the United States, the increase in gasoline pump prices has garnered significant attention, with average costs at one point exceeding $4 per gallon nationwide. This increase significantly contributed to a rise in U.S. consumer price pressures in March.

The Iran conflict seems to affect consumer perceptions mainly via disruptions to gasoline and possibly other prices. In contrast, military and diplomatic developments that do not alleviate supply constraints or reduce energy prices are unlikely to support consumers,” Hsu stated. In April, year-ahead inflation expectations rose to 4.7%, a notable increase from 3.8% in March, marking the largest one-month change since April 2025. It stands significantly higher than the levels observed in 2024 and the range of 2.3%-3.0% recorded in the two years preceding the COVID-19 pandemic. Long-run inflation projections increased to 3.5% this month, marking the highest level since October 2025.