By Greg Robb
Consumers’ views sour on business conditions and personal finances, and inflation expectations soar
Consumer spending cooled in the first few months of 2026, even before the conflict with Iran started.
The mood among consumers soured notably in early April, with the Iran conflict getting the blame for unfavorable changes in business conditions and personal finances.
A survey of consumer sentiment hit a record low of 47.6 in April, falling from 53.3 in the prior month, the University of Michigan said.
Economists polled by the Wall Street Journal had expected sentiment to inch lower in April, to a reading of 52.
Consumer sentiment helps gauge how Americans feel about their own finances as well as the broader economy.
Demographic groups across ages, incomes and political parties all posted setbacks in sentiment, as did every component of the index, reflecting the widespread nature of this month’s drop, researchers at the university said.
Key details: A gauge that measures what consumers think about the current state of the economy fell to a record low of 50.1 in April, down from 55.8 in the prior month.
More notably, a measure that asks about expectations for the next six months sank to 46.1 from 51.7 in March. The last time it was this low was in 1980.
Inflation expectations increased due to the possibility that higher gasoline prices will raise prices for an array of goods.
Consumers expect prices to increase 4.8% in the next year, up from expectations for 3.8% in the prior month. The current rate of inflation, based on the consumer-price index, is 3.3%.
Over the next five years, inflation is expected to rise 3.4%, up from expectations for 3.2% in March.
Big picture: Americans grew much more concerned about their personal finances and the health of the economy as higher gasoline prices started to bite in April.
One-year expectations for business conditions plunged 20% and assessments of personal finances dropped 11%. Buying conditions for durable goods and cars worsened.
Looking ahead: Most of the survey data was collected prior to the recent cease-fire, suggesting that final readings could show some improvement in sentiment, said Eugenio Aleman, chief economist at Raymond James.
But with the Iran conflict far from resolved, Oren Klachkin, financial market economist at Nationwide, said he sees softer readings ahead.
Market reaction: Stocks SPX were mixed in late morning trading on Friday, while the 10-year Treasury yield BX:TMUBMUSD10Yrose to 4.306% in early morning trading.
-Greg Robb
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04-10-26 1059ET
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