American families are feeling the squeeze as consumer sentiment plummeted to its lowest level in more than seven decades, driven by soaring gasoline prices and the economic fallout from the Iran war's disruption of global energy supplies. The University of Michigan's latest consumer survey, released Friday, showed sentiment fell early this month to a preliminary reading of 48.2, the lowest on records going back to 1952.
Cost Pressures Hit Working Families
Joanne Hsu, the survey's director, said, "About one-third of consumers spontaneously mentioned gasoline prices and about 30% mentioned tariffs." She added, "Taken together, consumers continue to feel buffeted by cost pressures, led by soaring prices at the pump." The pain at the pump has been relentless, with the national average price for a gallon of gasoline stuck above $4 for weeks, eating into household budgets and forcing families to make difficult choices about spending.
The ongoing closure of the Strait of Hormuz, a key global passageway through which 20% of the world's oil passes, along with various other commodities, has kept global energy prices elevated. Hsu warned that "Middle East developments are unlikely to meaningfully boost sentiment until supply disruptions have been fully resolved and energy prices fall," suggesting that relief for struggling consumers may not come soon.
Economic Anxiety Deepens
The survey's measure of Current Economic Conditions plunged 9% in early May to a reading of 47.8, owing to a surge in concerns about high prices both for personal finances as well as buying conditions for major purchases, according to a release. Oren Klachkin, financial market economist at Nationwide, said, "In sharp contrast to investors, consumers feel miserable right now." He added, "It's hard to see a path for sentiment to rebound at least until gasoline prices start coming down on a sustained basis."
The disconnect between Wall Street and Main Street is stark—while employers kept hiring through the Iran war's energy shock, adding 115,000 jobs in April and keeping unemployment steady at 4.3%, working Americans are modifying their purchasing behavior as higher gas prices eat a bigger share of people's paychecks and Trump's tariffs make certain goods more expensive.
Real-World Consequences for Businesses and Workers
The economic anxiety is translating into concrete business impacts. Whirlpool, a major appliances producer, missed analysts' estimates in first-quarter earnings reported earlier this week, and its stock fell as much as 20% after the report. Whirlpool CFO Roxanne Warner said demand for appliances has "reached recession-level lows," pointing to low sentiment as a major reason why. She said, "The industry contracted about 7.4%." Warner added, "These are levels that last time you've seen was in the great financial crisis."
While Americans continue to hold on to the jobs that allow them to spend, they are still likely modifying their purchasing behavior, especially with higher gas prices eating a bigger share of people's paychecks and Trump's tariffs making certain goods more expensive. The combination of energy shocks and trade policy is creating a perfect storm of cost pressures that disproportionately burden working families.
Why This Matters:
The collapse in consumer sentiment to a 74-year low reflects the tangible strain that energy price shocks and tariff policies place on everyday Americans. When one-third of consumers spontaneously mention gasoline prices in surveys, it signals that fuel costs have become a dominant concern in household budgets. The fact that demand for major appliances has reached recession-level lows, with the industry contracting 7.4%, demonstrates how cost pressures force families to delay essential purchases. The ongoing closure of the Strait of Hormuz, which handles 20% of global oil flows, means these pressures may persist until diplomatic solutions resolve the supply disruption. Without coordinated government action to ease energy costs and reconsider tariff policies that further burden consumers, working families will continue bearing the brunt of economic policies and geopolitical conflicts beyond their control.