Consumer confidence in the United States declined in April, with the University of Michigan’s Consumer Sentiment Index falling to 50.8, down from 57 in March. This was lower than the expected 54.5.
The Current Conditions Index decreased to 56.5 from 63.8, while the Consumers Expectations Index dropped to 47.2 from 52.6. The one-year inflation outlook rose to 6.7% from 5%, and the five-year outlook increased to 4.4% from 4.1%.
Unemployment Expectations Reach New High
The proportion of consumers anticipating a rise in unemployment reached its highest level since 2009. Following the report, the US Dollar Index was reported to be losing 1.3%, sitting at 99.62.
What we’ve seen here is a sharp downtick across key measures of consumer sentiment. The University of Michigan’s data makes clear that American households are growing increasingly wary of the economic environment. The drop in the headline sentiment figure to 50.8 not only missed expectations by a wide margin—it also represents an alarming fall compared to March. This sort of movement—not mild, not mixed—should prompt a recalibration of short-term assumptions.
The fall in the Current Conditions Index suggests that households are experiencing more immediate financial strain. That’s not just their outlook; it’s their reality. Meanwhile, the Expectations Index—tracking where they believe the economy is headed—slid even deeper. When everyday households lose faith in both the present and the future, any efforts to boost consumption or economic expansion face headwinds.
More alarming, perhaps, is the inflation outlook—not just for the next year, which surged to 6.7%, but even five years out, which is now at 4.4%. This sort of expectations creep is a red flag for those watching the stability of long-dated pricing models. The anchored expectations that central banks count on are clearly under pressure. We find this hints that the public isn’t buying the disinflation narrative, regardless of actual print numbers.
Pessimism Extends Beyond Inflation
The surprise here is that pessimism hasn’t been limited to inflation alone. The survey shows the highest proportion of consumers expecting unemployment to rise since 2009. That’s not inconsequential—not with employment numbers still sitting historically strong. It points to growing unease about job security, which tends to cascade: consumers clamp down on spending, credit risk rises, and speculative assets lose steam.
Market-wise, we saw the immediate reaction in the US Dollar, falling decisively by 1.3% to 99.62 following the release. That’s not just a reaction—it’s a rethink. Positioning had priced in more resilience. A sharp hit to sentiment, accompanied by a jump in inflation forecasts and deteriorating job expectations, punches through that idea.
From a strategic point of view, these developments warrant close scrutiny of volatility expectations. We’re watching for derivatives tied to consumer sectors, especially anything indexed off real consumption activity. Any exposure aligned with growth proxies deserves a cautious approach until forward sentiment data stabilises or reverses. We’re not ruling out a short-term retracement in dollar-based hedges either, particularly where positioning had leaned heavily on strength.
Tactically, this might lead us to lean into select duration trades—particularly in anticipation that concerns over stickier inflation and weakening confidence could influence yield curve dynamics. There’s also the potential for increased bid interest in tail risk hedging instruments, especially as traders begin preparing for a slower retail-driven economic cycle. Mind the repricing of unemployment risk across credit-focused derivatives.
We find it helpful to avoid overreliance on historical robustness here. The dynamics are shifting quickly—these are some of the weakest sentiment levels seen in well over a decade, with inflation expectations moving counter to policy guidance. For us, that’s the sort of setup that invites recalibration. Not panic, but more precision—especially across strategies borrowing heavily from forward consumer behaviour.
