Sentiment has remained essentially unchanged since January 2024, continuing the plateau that followed the large gains seen at the end of 2023, according to the University of Michigan Surveys of Consumers.

The long-run business outlook lifted slightly to reach its highest reading since June 2021, while views of personal finances softened amid renewed discontent with high prices, said U-M economist Joanne Hsu, director of the Surveys of Consumers. Overall, consumers perceived few developments, positive or negative, in the state of the economy since the start of the new year

“For a third consecutive month, sentiment has been virtually unchanged, as consumers perceived few developments this year that would take the economy off its current path,” Hsu said. “At the same time, consumers continued to express uncertainty about the future trajectory of the economy pending the outcomes of the upcoming election. Currently, there is no evidence that global geopolitical factors are on the forefront of consumers’ minds.”

Frustration over high prices rises slightly

Consumers have recognized that inflation has eased substantially over the past two years, and they generally do not expect inflation to come roaring back, Hsu said. However, they showed concerns that the slowdown in inflation may have stalled; signs of their frustration over high prices were visible throughout the survey.

About 38% of consumers blamed high prices for eroding their living standards, up from 33% last month. For the third consecutive month, a rising share of consumers spontaneously mentioned food or grocery prices. Sentiment for consumers mentioning food were substantially higher than for those who did not, suggesting that high prices of food continue to weigh on a sizable share of consumers.

Partisan divides in economic attitudes persist

Partisan differences in views of the economy remain pronounced, with the typical pattern that consumers belonging to the party in the White House hold more favorable views than those whose party does not, with Independents in the middle, Hsu said.
While Democrats and Independents saw little change in sentiment this month, sentiment for Republicans fell almost 10%. Republicans’ views of their personal finances, buying conditions for durable goods and year-ahead business conditions all softened.

Despite these declines, sentiment for Republicans remains well above 2022 and 2023 levels. Consumers of all three political groups expressed agreement that the future trajectory of the economy is contingent on the outcomes of the election later this year.

Consumer Sentiment Index

The Consumer Sentiment Index fell to 77.2 in the April 2024 survey, down from 79.4 in March and above last April’s 63.7. The Current Index fell to 79.0, down from 82.5 in March and above last April’s 68.5. The Expectations Index fell to 76.0, down from 77.4 in March and above last April’s 60.6.

Consumer sentiment continued to plateau and was virtually unchanged for the third month in a row. Since January, sentiment has remained remarkably stable within a very narrow 2.5 index point range, well under the 4.8 points necessary for a statistically significant difference in readings. The long-run business outlook inched up to reach its highest reading since June 2021, while views of personal finances softened. Different parts of the population exhibited offsetting changes this month. Republicans posted notable declines in sentiment this month, whereas Democrats and Independents did not. Sentiment for younger consumers rose, in contrast to middle-aged and older adults whose sentiment changed little or fell. Overall, consumers continue to express uncertainty about the future trajectory of the economy pending the outcomes of the upcoming election, but at this time there is no evidence that global geopolitical factors are on the forefront of consumers' minds.

Year-ahead inflation expectations ticked up from 2.9% last month to 3.2% this month. Long-run inflation expectations also edged up, from 2.8% last month to 3.0% this month; they have been within the narrow 2.9-3.1% range for 29 of the last 33 months. Long-run inflation expectations remain elevated relative to the 2.2-2.6% range seen in the two years pre-pandemic.