UMich Sentiment Crashes To Lowest On Record As War Sparks Inflation Panic Among Democrats

While the March UMich sentiment survey was completed before and after the start of the Iran War (with only modest impacts on sentiment and inflation expectations), today's preliminary April data survey period was all in the war with expectations for a notable drop in sentiment and sizable jump in inflation expectations.

It turns out the expectations were right in direction but underestimated the scale as headline sentiment plunged from 53.3 to 47.6 (far worse than the 51.5 exp) with Current Conditions (50.1 vs 53.4 exp vs 55.8 prior) and Expectations (46.1 vs 50.2 exp vs 51.7 prior)...

Source: Bloomberg

That is a record low for the headline sentiment and Current Conditions and lowest print for Expectations since 1980.

Demographic groups across age, income, and political party all posted setbacks in sentiment, as did every component of the index, reflecting the widespread nature of this month’s fall.

One-year expected business conditions plunged about 20% and is now 6% below last April.

Assessments of personal finances declined about 11%, with consumers expressing a substantial increase in concerns over high prices and weaker asset values.

Year-ahead inflation expectations surged from 3.8% in March to 4.8% this month, the largest one-month increase since April 2025, but longer-term expectations rose only modestly...

Of course, it's Democrats that are 'panicans' once again at inflation (Dems +4.8%, Reps +1.0%)...

One thing of note in that chart - how is the overall inflation expectation screaming higher (to equal Democrats' view) with the actual breakdown by political cohort showing no huge rise?

Finally, on the potential bright side, UMich Surveys of Consumers Director Joanne Hsu notes that "98% of interviews were completed prior to the April 7th announcement of a temporary cease-fire. Economic expectations will likely improve after consumers gain confidence that the supply disruptions stemming from the Iran conflict have ended and gas prices have moderated."