US consumer sentiment sees largest drop since 1990 after Trump tariff chaos

TruthLens AI Suggested Headline:

"US Consumer Sentiment Drops Sharply Amid Trade War Uncertainty"

US consumer sentiment sees largest drop since 1990 after Trump tariff chaos analysis cover image The Guardian 7.1
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Original Article Source: https://www.theguardian.com/us-news/2025/apr/25/trump-tariffs-trade-war-consumer-sentiment
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AI Analysis Average Score: 7.1
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TruthLens AI Summary

In April, US consumer sentiment experienced a dramatic decline, plummeting by 32% since January, marking the largest drop since the 1990 recession. According to a report from the University of Michigan’s Institute for Social Research, the consumer sentiment index fell from 57 in March to 52.2, indicating widespread concern about the economic outlook among Americans. Joanne Hsu, director of the surveys of consumers, noted that expectations deteriorated across various demographics, including age, education, income, and political affiliation. The uncertainty surrounding trade policy, particularly due to the ongoing trade war initiated by President Donald Trump, has contributed significantly to these negative sentiments. Consumers are increasingly worried about inflation, as expectations surged from 5% in March to 6.5% in April, the highest level recorded since 1981. This rise in inflation expectations reflects a growing skepticism towards the effectiveness of Trump's tariffs, which he has claimed would not raise prices yet have left many Americans unconvinced of their benefits.

The ramifications of this decline in consumer sentiment extend beyond individual perceptions to potential economic consequences. With heightened expectations of inflation, consumers are now anticipating slower income growth in the coming year, leading to increased hesitance in spending. This trend poses a significant risk to the overall economy, as decreased consumer spending can contribute to a slowdown. Hsu emphasized that without consistently strong income growth, consumer expenditure is unlikely to remain robust amid the numerous warning signs perceived by the public. Despite a brief rally in stock markets following Trump's softened rhetoric on tariffs, the persistent decline in consumer sentiment suggests that the broader population remains wary of economic conditions. As consumers navigate this turbulent landscape, the potential for a slowdown in economic activity looms large, underscoring the challenges faced by policymakers in stabilizing the economy amidst trade uncertainties.

TruthLens AI Analysis

The article highlights a significant decline in US consumer sentiment, attributing this drop to the effects of Donald Trump's trade policies. The sharp decrease in consumer confidence and rising inflation expectations reflect broader economic anxieties among the American public.

Consumer Sentiment and Economic Outlook

The article notes that the consumer sentiment index fell by 32% since January, marking the largest decline since the 1990 recession. This sharp drop indicates widespread concern among consumers regarding their financial futures, as reflected in the survey conducted by the University of Michigan. Consumers from various demographics have expressed heightened fears about inflation and economic stability, demonstrating that the impact of trade policies may not be limited to financial markets but extend into everyday lives.

Perception of Trade Policies

Despite Trump's assertions that tariffs would bolster the economy, the article suggests that many Americans remain unconvinced. The increase in inflation expectations from 5% to 6.5% illustrates a growing pessimism regarding economic conditions. The disconnect between Wall Street's reactive nature and consumer sentiment indicates that while markets may respond positively to temporary policy shifts, the general public is more cautious and skeptical about long-term economic health.

Implications for Economic and Political Climate

This article may aim to influence public opinion by highlighting the negative consequences of current trade policies. Given the timing of the report, it could serve as a critique of the Trump administration's approach to trade, potentially swaying voter sentiment ahead of elections. By underscoring the fears of inflation and economic instability, the article could mobilize consumer concern and drive political discourse around economic policy.

Impact on Financial Markets

The decline in consumer sentiment and rising inflation expectations could have significant implications for financial markets. Investors often rely on consumer confidence as a barometer for economic health, and a sustained decline may lead to increased volatility in stock and bond markets. Sectors sensitive to consumer spending could face challenges, with retail and consumer goods companies being particularly vulnerable.

Societal Reception and Support Bases

The article likely resonates more with communities that hold critical views of Trump's policies or those experiencing economic hardships. By addressing the fears and uncertainties faced by average Americans, it speaks to a demographic concerned about financial stability and the impact of government policies on everyday life.

Global Economic Context

From a global perspective, the article reflects ongoing tensions in trade relationships and their ramifications on economic stability. As international markets react to changes in US trade policy, the sentiment expressed by American consumers may influence global economic dynamics, especially with regard to countries heavily reliant on trade with the US.

Potential Use of AI in Analysis

While it’s uncertain if AI specifically contributed to this article, the structured presentation of data and consumer sentiments could suggest a utilization of AI models for data analysis. Such tools may have been employed to synthesize survey data or predict economic trends, thereby shaping the narrative presented.

The article presents a clear and concerning view of the current economic climate in the US. It effectively communicates the fears surrounding inflation and consumer confidence, although it is important to consider the broader context and potential biases within the reporting. Overall, the reliability of the information hinges on the accuracy of the survey data and the sources cited.

Unanalyzed Article Content

Source URL: https://www.theguardian.com/us-news/2025/apr/25/trump-tariffs-trade-war-consumer-sentiment

US consumer sentimentplummetedin April afterDonald Trump’s trade war threw theglobal economyinto chaos, according to a new report.

The index of consumer sentiment, a score based on a monthly survey asking Americans about their financial outlooks, fell by 32% since January – the largest drop since the 1990 recession, according to the University of Michigan’s Institute for Social Research.

“Expectations worsened for vast swaths of the population across age, education income and political affiliation,” said Joanne Hsu, director of the surveys of consumers, in a statement. “Consumers perceived risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead.”

In April, the index of consumer sentiment fell to 52.2, down from 57 in March. The last time the index fell below 55 was in the summer of 2022, when inflation rose to 9%.

Consumer expectation of inflation also skyrocketed from 5% in March to 6.5% in April, the highest it’s been since 1981.

It’s a sign that, despite his insistence thattariffswill “make a lot of money” and haven’t yet raised prices, Trump still hasn’t convinced many Americans that his tariffs will actually work.

Trump’s trade policies have scared investors, causingsell-offsin stock andbond markets. The presidentsoftenedhis tone earlier this week on his trade war with China after a volatile few weeks. Markets rallied after Trump said that his Chinese tariffs “will come down substantially”, though he also warned that “it won’t be zero.”

But Wall Street tends to be more reactive than consumers, who have shown four straight months of declining sentiment on the economy. Even after Trump paused the highest of his reciprocal tariffs, causing stock markets to rise, consumer inflation expectations still remained much higher compared to March.

Higher inflation expectations have also been paired with consumers anticipating slower income growth for the year ahead, meaning that more of them will be hesitant to spend in the months ahead – which all could ultimately mean a slowdown in the economy.

“Without reliably strong incomes, spending is unlikely to remain strong amid the numerous warning signs perceived by consumers,” Hsu said.

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Source: The Guardian