Gas Prices Drive Consumer Sentiment Index to All-Time Low

The gas price spike drove the University of Michigan’s Index of Consumer Sentiment to the lowest level recorded in its over 73-year history.

The index declined by 3.5 points in April, dropping to 49.8, amid the rising prices caused by the Iran war, according to the Surveys of Consumers’ final results for April.

“The Iran conflict appears to influence consumer views primarily through shocks to gasoline and potentially other prices,” Surveys of Consumers Director Joanne Hsu said in the report. “In contrast, military and diplomatic developments that do not lift supply constraints or lower energy prices are unlikely to buoy consumers.”

The connection between the price of gas and consumer sentiment was seen earlier in April, when a softening of gas prices caused by the announcement of a two-week ceasefire was followed by a modest improvement in consumer sentiment, according to the report.

April’s decline in consumer sentiment was seen across political affiliation, income, age and education, per the report.

The Surveys of Consumers also found that consumers’ expectations for business conditions on both short and long time horizons declined to levels that were about as low as those seen a year earlier when tariffs were implemented.

It also found that consumers’ year-ahead inflation expectations surged from 3.8% in March to 4.7%, the largest one-month increase since April 2025, and long-run inflation expectations climbed to 3.5%, the highest reading since October.

The Conference Board’s most recent Consumer Confidence Index, which was released March 31, about a month after the war began, found that consumer confidence had inched up in March despite surging costs from tariffs and war.

The impact of rising costs was not seen in the organization’s headline or component indexes but was evident in consumers’ 12-month inflation expectations, which rose to their highest levels since August, The Conference Board said in a March 31 press release.

“Consumers’ write-in responses on factors affecting the economy continued to skew towards pessimism,” The Conference Board Chief Economist Dana M Peterson said in the release. “Comments about prices and the cost of goods suggest that the cost of living remained at the top of consumers’ minds.”

The Conference Board is set to release its next Consumer Confidence Index on Tuesday (April 28).