In April, consumer confidence decreased significantly due to concerns about President Trump's tariff policies. The University of Michigan's latest survey revealed that sentiment plummeted to its lowest level since June 2022, reaching 50.8, below both last month's 57 and economists' expected 53.8.

Worries about inflation escalated as one-year expectations surged to 6.7%, the highest since 1981, up from 4.9% the prior month. Long-term inflation expectations for the next five to ten years also rose to 4.4% from 4.1% in March. Additionally, expectations for unemployment hit their lowest level since the Great Financial Crisis.

University of Michigan Survey of Consumers director, Joanne Hsu, highlighted the decline in sentiment, attributing it to concerns about trade war developments that have been fluctuating throughout the year. Consumers expressed apprehension about business conditions, personal finances, incomes, inflation, and labor markets, which may increase the risk of a recession.

The survey was conducted between March 25 and April 8, capturing responses after Trump's tariff announcements on April 2 but before the subsequent changes. Despite the recent market rebound, the S&P 500 index has still dropped over 7% since April 2nd, reflecting consumers' and investors' shared belief that tariffs could harm the economy.

Capital Economics assistant economist, Harry Chambers, noted that households and markets view the tariffs as potentially damaging to the US economy. The impact of the tariff discussions has not yet been reflected in recent inflation data, with the Producer Price Index (PPI) rising 3.4% and the Consumer Price Index (CPI) up 2.8% in March, showing a minimal core CPI increase compared to the last four years.