Shaken Consumer Confidence
Cumulative effects of many of the economic indicators and of disruption of U.S. trade policies have become onerous for operators and consumers, as well. While as of late April the labor market appeared relatively healthy, with unemployment steady at 4.2%, according to the U.S. Bureau of Labor Statistics, consumer and business leader confidence in the economy was increasingly shaken.
The University of Michigan’s Survey of Consumers sentiment index for April, based on interviews conducted between March 25 and April 8, dropped 11%, marking the fourth consecutive monthly decline and a 30% decline since December 2024. In April’s data release, survey director Joanne Hsu commented, “Consumers report multiple warning signs that raise the risk of recession: Expectations for business conditions, personal finances, incomes, inflation and labor markets all continued to deteriorate. The share of consumers expecting unemployment to rise in the year ahead increased for the fifth consecutive month and is now more than double the November 2024 reading and the highest since 2009.”
Hsu added that consumers’ year-ahead inflation expectations surged from 5.0% in February to 6.7% in April, the highest reading since 1981 and marking four consecutive months of unusually large increases of 0.5 percentage points or more.
Likewise, The Conference Board Consumer Confidence Index fell in April, by 7.9 points to 86.0. April’s reading represented the fifth consecutive month of declines, reaching a level not seen since the onset of the COVID-19 pandemic. The Present Situation Index — based on consumers’ assessment of current business and labor market conditions — decreased 0.9 points to 133.5. The Expectations Index — based on consumers’ short-term outlook for income, business and labor market conditions — dropped 12.5 points to 54.4, the lowest level since October 2011 and well below the threshold of 80 that typically signals a recession ahead.
“The decline was largely driven by consumers’ expectations. The three expectation components — business conditions, employment prospects and future income — all deteriorated sharply, reflecting pervasive pessimism about the future,” noted Stephanie Guichard, senior economist, global indicators, in The Conference Board’s announcement. “Notably, the share of consumers expecting fewer jobs in the next six months (32.1%) was nearly as high as in April 2009, in the middle of the Great Recession. In addition, expectations about future income prospects turned clearly negative for the first time in five years, suggesting that concerns about the economy have now spread to consumers worrying about their own personal situations.”
It all adds up to some bitter pills for foodservice operators to swallow, as pullbacks in consumer spending and demand for value pricing compete head-on with the economic realities of rising costs of doing business.
Consumer Confidence Index
The Conference Board Consumer Confidence Index fell by 7.9 points in April to 86.0. The fall in confidence was broad-based across all age groups, political affiliations, and most income groups. The decline was sharpest among consumers in households earning more than $125,000 a year. In write-in comments, consumers explicitly mentioned concerns about tariffs increasing prices and having negative impacts on the economy.
Source: The Conference Board, NBER
April Consumer Sentiment Index
April’s 52.2 sentiment level was the lowest recorded by this national consumer sentiment survey since the height of the pandemic and the second lowest in data dating back to 1952.
