Americans are increasingly worried about inflation and a possible recession
of ConsumerAffairsApril 14, 2025
Key Takeaways
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Consumer sentiment fell 11% in April, now down over 30% since December 2024, amid broad-based concern about economic conditions.
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Labor market pessimism is deepening, with unemployment expectations at their highest point since 2009 and more than twice November’s levels.
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Inflation expectations surged to 6.7%, the highest since 1981, reflecting widespread anxiety across all political affiliations.
Consumer confidence took another sharp dive in April, marking the fourth consecutive month of decline and highlighting mounting anxiety over the U.S. economy. According to the University of Michigan Consumer Sentiment Index, sentiment dropped by 11% from March, representing a steep 30% fall since December 2024.
This months drop in sentiment was both unanimous and widespread cutting across all age groups, income levels, education brackets, geographic regions, and political affiliations. The data underscores a growing national unease amid volatile trade policies and escalating signs of a potential economic downturn.
Warning signs increase
Consumers are increasingly pessimistic about key economic indicators. Reports show deteriorating expectations regarding personal finances, business conditions, incomes, and inflation. Most notably, labor market fears are escalating the number of consumers anticipating higher unemployment in the coming year has more than doubled since November 2024, reaching levels not seen since the Great Recession in 2009.
This sharp erosion in labor confidence is a stark contrast to recent years, during which strong job markets and rising wages helped fuel consumer spending. Now, however, even that foundation appears to be weakening, potentially curbing household spending and growth in the months ahead.
Inflation expectations surge to 1980s levels
Adding further pressure is a historic spike in inflation expectations. Year-ahead inflation forecasts jumped from 5.0% in March to 6.7% in April the highest figure since 1981. It also marks the fourth consecutive month of large inflation expectation hikes of 0.5 percentage points or more. The surge was observed across the political spectrum, signaling deep-seated public concern.
Long-term inflation expectations also ticked upward, rising from 4.1% to 4.4%, with a particularly notable increase among politically independent respondents. These expectations can influence real-world economic behavior, such as spending, saving, and wage demands potentially fueling further inflationary cycles.
The sentiment readings were based on interviews conducted between March 25 and April 8, just before the April 9 partial reversal of tariffs, which had been a significant driver of economic uncertainty. Whether that move will be enough to stabilize sentiment remains to be seen, but for now, consumers appear increasingly worried about a turbulent economic road ahead.
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