U.S. consumer sentiment experienced a significant drop in April, marking the fourth consecutive month of declines. This decline appears to be a reaction to President Donald Trump’s trade wars, which have raised concerns about potential job losses and inflation. The preliminary reading of the University of Michigan’s consumer sentiment index fell 11% to 50.8, the lowest since the depths of the COVID-19 pandemic. Over the past year, sentiment has dropped by 34%. The survey director, Joanne Hsu, noted that the decline was widespread across all demographics. Expectations for rising unemployment are now at their highest since 2009. While consumer sentiment isn’t always a reliable economic indicator, it often reflects public sentiment towards presidential leadership. Sentiment among Republicans has fallen 6% over the past month as Trump implemented tariffs but then paused some import taxes. According to James Knightley of ING, 67% of respondents blame the government for poor handling of inflation and unemployment. White House press secretary Karoline Leavitt emphasized trust in Trump’s tariff strategy. The trade war has resulted in a baseline tariff of 10% on most countries, with specific rates for China, Canada, and Mexico. Financial markets have also shown signs of instability, with the interest rate on the 10-year U.S. Treasury note rising to 4.51%. Larry Fink of BlackRock suggested the U.S. economy might already be in a recession. Long-term inflation expectations have risen to 4.4%, up from 4.1% last month, which could concern the Federal Reserve. Inflation expectations over the next five years are now at their highest since 1991. Consumer sentiment remains divided by party, with steep drops recorded in April across all groups. This uncertainty may lead to reduced consumer spending.
— new from AP News
