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Consumer Outlook Keeps Falling

Index shows expectations getting bleaker as more anticipate worsened inflation, falling income and waning job prospects.

April 25, 2025
Consumer Outlook Keeps Falling

Consumers are seeing risks in various corners of the economy, including the possibility of increased inflation, the index found.

Credit:

Pexels/Mmichal Robak

2 min to read


U.S. consumer sentiment continued to flag this month, according to a major index, as fluctuating U.S. trade policy eroded economic outlook.

The University of Michigan index shows sentiment for current conditions fell for a fourth consecutive month, dropping 8% from March and reflecting erosion in sentiment for personal and business finances.

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Expectations for the future are falling faster, dropping a cumulative 32% from January, the biggest three-month percentage decline since the 1990 recession, according to the index.

Consumers are seeing risks in various corners of the economy, including the possibility of increased inflation. And while middle-income families’ sentiment worsened the most, outlook across age, education and income levels, and political affiliations declined, the index found. Job market expectations stayed low.

“Even more concerning for the path of the economy, consumers anticipated weaker income growth for themselves in the year ahead. Without reliably strong incomes, spending is unlikely to remain strong amid the numerous warnings signs perceived by consumers,” said Joanne Hsu, director of the index’s consumer surveys.

Looking to the year ahead, expectations of inflation jumped from 5% to 6.5%, the highest level since 1981 and the fourth straight month of atypical increases of at least half a percentage point, according to the index. The jump came across political affiliations. Longer-term inflation expectations rose from 4.1% to 4.4%, including a large increase among independent voters.

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