Conference Board Consumer Expectations Plunge To 14 Year Lows; Inflation Expectations Soar

Another day, another sentiment measure disappoints…

US consumer confidence fell in April to an almost five-year low on growing pessimism about prospects for the economy and labor market due to tariffs. The Conference Board’s gauge of confidence decreased nearly 8 points to 86, the weakest since May 2020. This was the fifth straight monthly decline, the longest such stretch since 2008. 

Worse still, consumer expectations for the next six months plunged to the lowest level since 2011, while a gauge of present conditions also fell.

“Consumer confidence declined for a fifth consecutive month in April, falling to levels not seen since the onset of the COVID pandemic,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. 

“The decline was largely driven by consumers’ expectations. The three expectation components—business conditions, employment prospects, and future income—all deteriorated sharply, reflecting pervasive pessimism about the future. 

Notably, the share of consumers expecting fewer jobs in the next six months (32.1%) was nearly as high as in April 2009, in the middle of the Great Recession. In addition, expectations about future income prospects turned clearly negative for the first time in five years, suggesting that concerns about the economy have now spread to consumers worrying about their own personal situations.

However, consumers’ views of the present have held up, containing the overall decline in the Index.”

Labor market conditions weakened, extending their very recent downtrend…

High financial market volatility in April pushed consumers’ views about the stock market deeper into negative territory, with 48.5% expecting stock prices to decline over the next 12 months (the highest share since October 2011). 

Meanwhile, average 12-month inflation expectations reached 7% in April – the highest since November 2022, when the US was experiencing extremely high inflation. 

Notably, the NYFed’s measure of inflation expectations (and the market’s measure of inflation expectations) are NOT screaming higher like UMICH and CONF BOARD surveys…

Finally, we note that April’s fall in confidence was broad-based across all age groups and most income groups. The decline was sharpest among consumers between 35 and 55 years old, and consumers in households earning more than $125,000 a year.

Guichard added that write-in responses on what topics are affecting views of the economy revealed that tariffs are now on top of consumers’ minds, with mentions of tariffs reaching an all-time high.

Consumers explicitly mentioned concerns about tariffs increasing prices and having negative impacts on the economy. 

Inflation and high prices remained important for consumers’ views about the economy: while the majority complained about the high cost of living, there were also some references to declines in the prices of gas and some food items.

The decline in confidence was shared across all political affiliations.