US Consumer Sentiment Plummets to Record Low Amid Geopolitical Tensions

US consumer confidence has collapsed to an unprecedented low, with the University of Michigan's headline sentiment index falling 10.7% from March to reach 47.6. The sharp decline highlights the immediate economic toll of the conflict in Iran and the resulting volatility in global energy markets. The data reveals a significant shift in household expectations, as both current conditions and future outlooks saw double-digit monthly drops. This erosion of confidence comes at a critical time for policymakers grappling with persistent inflationary pressures and shifting geopolitical alliances. One-year inflation expectations jumped to 4.8%, a full percentage point increase from March and the highest level since August 2025. This coincides with Bureau of Labor Statistics data showing a 0.9% monthly rise in the all-items CPI for March, bringing the annual inflation rate to 3.3%, driven primarily by a surge in energy costs while food inflation remained relatively stable. While survey director Joanne Hsu noted that many responses were captured before the April 7 ceasefire, the sentiment suggests a fragile recovery. Markets are likely to remain sensitive to energy supply disruptions, as five-year inflation expectations also ticked up to 3.4%. The combination of record-low sentiment and rising price expectations may complicate the Federal Reserve's path forward regarding interest rate policy.