American consumers are reporting the lowest levels of economic confidence since 1978, according to preliminary April readings from the University of Michigan consumer sentiment surveys.
The data reveals a stark disconnect between macroeconomic indicators and public perception. While the U.S. economy has grown steadily for five years and inflation has retreated from its recent peak, public opinion continues to decline.
A recent CBS News poll supports this trend, finding that 63% of respondents rate the current economy as "bad." Furthermore, 65% of those surveyed expressed disapproval of President Trump's handling of economic matters.
Partisan divide widens
The gap in economic perception between political parties has reached unprecedented levels. In 2009, Democrats and Republicans held similar negative views during the Great Recession. Today, the sentiment has inverted and fractured.
In the preliminary April University of Michigan reading, sentiment among Democrats sat at 31.8, while Republicans reported a much higher 87.1. This partisan chasm mirrors the volatility seen during the peak of inflation in 2022.
Economic indicators suggest a more stable environment than the public perceives. The unemployment rate stood at 4.3% in March, and annual inflation has remained at 3.3% despite a recent surge in energy prices. The S&P 500 remains largely flat for the year, and GDP continues to rise.
However, rising fuel costs are weighing on households. Gasoline prices averaged $4.13 a gallon in April, up from under $3.00 in February. Analysts suggest consumers experience inflation as a cumulative cost rather than a year-over-year percentage change, leading to persistent sticker shock at grocery stores.
Labor market nuances also contribute to the gloom. While headline numbers are solid, job growth has been narrow and largely concentrated in the healthcare sector.
Jared Bernstein, former top White House economist for President Biden, warned against dismissing these consumer fears. "Never try to tell the American people they're better off than they think they are," Bernstein told Axios. He added that policymakers should avoid actions that increase living costs, such as tariffs or unnecessary conflicts.
