US consumer sentiment hits record low amid fallout from the Iran war

Financial News –

Amid inflation driven by the war involving the Islamic Republic of Iran, consumer confidence in the United States of America (US) has plunged to an all-time low.
According to CNBC, the University of Michigan’s consumer sentiment index for April, released on the 10th (local time), came in at 47.6, a drop of 5.7 points (10.7%) from the March survey. This marked a fall to the lowest level on record.
Both the current-conditions index and the expectations index posted double-digit declines.
The current-conditions index fell from 55.8 in March to 50.1 in April, while the expectations index dropped from 51.7 to 46.1 over the same period.
Inflation is the main factor behind the sharp decline in this index, which reflects consumers’ confidence in the economy.
Consumers now expect inflation to run at 4.8% one year from now. That is a jump of 1 percentage point from the March survey. Expectations were last at 4.8% in August of last year.
The war involving the Islamic Republic of Iran has pushed up oil prices, fueling consumers’ anxiety about inflation.
However, the one-year inflation expectation remains below the 6.5% level recorded in April last year, when President Donald Trump proclaimed "Liberation Day" and announced sweeping reciprocal tariffs.
Joanne W. Hsu, who heads the survey, explained that the shift in consumer sentiment to a more negative outlook was driven by the war involving the Islamic Republic of Iran.
The survey was conducted from the 24th of last month through the 7th of this month. However, 98% of responses were collected before the US and the Islamic Republic of Iran agreed to a two-week cease-fire, so most subsequent improvements in conditions were not captured.
Hsu expressed optimism that consumers’ economic outlook will improve once war-related supply disruptions ease and gasoline prices stabilize.


dympna@fnnews.com Song Kyung-jae Reporter