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Investing.com - U.S. consumer sentiment plunged by 11% in April compared to the previous month, while year-ahead inflation expectations hit their highest mark since the early 1980s, fueled by growing concerns around the impact of intensifying global trade tensions on prices and the broader economy.
The fourth straight month of deterioration in consumer sentiment was pervasive across political affiliations, with Americans reporting a slide in expectations for business conditions, personal finances, incomes, and the labor market, according to a survey from the University of Michigan on Friday.
The share of consumers now predicting joblessness to rise in the year ahead increased for the fifth consecutive month, is now more than double the November reading, and at its highest level since 2009.
"Consumers report multiple warning signs that raise the risk of recession," said Joanne Hsu, Director of Surveys of Consumers at the University of Michigan.
The preliminary Consumer Sentiment index dropped to 50.8 in April, down from 57.0 in March and below estimates of 54.0. In April 2024, it stood at 77.2.
Meanwhile, year-ahead inflation expectations surged to 6.7% from 5.0% in March, the highest reading since 1981.
However, the report noted that the interviews were conducted between March 25 and April 8, before U.S. President Donald Trump announced a partial reversal of his sweeping reciprocal tariffs on a host of trading partners.
Following a sharp slide in stocks in the wake of the imposition of steep new tariffs on a host of countries around the world, as well as a steep sell-off in bond markets, Trump announced a 90-day delay to most of the levies.
Crucially, Trump left universal tariffs of 10% in effect, as well as separate duties on steel and aluminum and some cars.
Analysts also took particular note of Trump's decision to omit China from the postponement. Instead, Trump lifted tariffs on the world's second-largest economy, escalating a tit-for-tat trade war. The U.S. has now slapped 145% levies on China, while Beijing has placed a tariff of 125% on the U.S.