Consumer sentiment plunged to the lowest level on record as Americans grappled with soaring gasoline prices and ongoing supply disruptions from the Iran war, even as employers added 115,000 jobs in April and the unemployment rate held steady at 4.3 percent.
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. 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."
Energy Supply Disruption Impact
Gas prices have remained elevated, with the national average price for a gallon of gasoline stuck above $4 for weeks. Global energy prices have stayed high as well, with 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. The strategic chokepoint's disruption has created sustained pressure on fuel costs that continue to erode household purchasing power.
Hsu said, "Middle East developments are unlikely to meaningfully boost sentiment until supply disruptions have been fully resolved and energy prices fall." 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."
Consumer Spending Contraction
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. The deterioration in consumer outlook has translated into measurable declines in major purchase categories.
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."
Labor Market Resilience
Employers kept hiring through the Iran war's energy shock. New employment data on Friday showed that the unemployment rate held steady at 4.3% in April as employers added a stronger-than-expected 115,000 jobs that month. 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.
Why This Matters:
The record-low consumer sentiment reading reveals how energy supply disruptions and elevated fuel costs directly undermine household economic security and purchasing power, even when employment remains stable. The closure of the Strait of Hormuz—through which 20% of global oil passes—demonstrates the strategic vulnerability created by Middle East instability and the critical importance of energy independence and diversified supply chains. With one-third of consumers citing gasoline prices and 30% mentioning tariffs as primary concerns, the combined effect of geopolitical instability and trade policy is measurably constraining consumer behavior. The 7.4% contraction in appliance demand to great financial crisis levels shows how quickly consumer caution translates into real economic consequences for businesses and employment, underscoring the need for policies that prioritize energy security and stable markets over government intervention.