US consumer sentiment fell sharply in early April as households grew increasingly worried that a wave of new tariffs could drive inflation higher, a University of Michigan survey showed Friday.
The sentiment index dropped to 50.8, approaching the record low hit in mid-2022, as both current conditions and expectations gauges weakened.
Roughly two-thirds of respondents spontaneously mentioned tariffs in interviews, up from about 40% in February and March, the survey said.
"The big takeaway from these data is households are feeling uneasy around tariffs," economists at Wells Fargo wrote in a note. "Consumers are growing more and more pessimistic."
Short-term inflation expectations surged to 6.7%, the highest level since 1981, while longer-run expectations edged up to 4.4%, marking their highest since 1991.
“This is an unusual development in that consumer inflation expectations typically follow realized inflation,” Wells Fargo said. “Yet consumers are growing increasingly concerned about the coming price environment given how widely tariffs are reaching.”
Despite the jump in inflation fears, Wells Fargo noted that consumer sentiment alone may not dictate behavior. “The deterioration in optimism is not a positive development for consumer spending, but we don't expect it alone will drive households into hiding.”