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Americans now expect prices to climb 6.7% over the next year, the University of Michigan's Surveys of Consumers said on Friday, April 11. That's the highest inflation expectation reading since 1981 for the closely watched survey.
While inflation cooled slightly in March, the latest federal numbers came before President Donald Trump announced his "liberation day" tariffs that led to trillions of dollars in market losses.
"This month's rise was seen across all three political affiliations," said Joanne Hsu, Michigan's director of the surveys. "Long-run inflation expectations climbed from 4.1% in March to 4.4% in April, reflecting a particularly large jump among independents."
Michigan's consumer sentiment index fell 11% from March to April, mirroring economic concerns felt despite Trump's 90-day pause on many of his tariffs. The consumer confidence number has dropped more than 34% from April 2024.
The mid-month survey's release came as Trump's constantly changing tariffs have caused massive volatility on Wall Street, worrying business owners and households across the country.
"Sentiment has now lost more than 30% since December 2024 amid growing worries about trade war developments that have oscillated over the course of the year," Hsu said. "Consumers report multiple warning signs that raise the risk of recession: expectations for business conditions, personal finances, incomes, inflation, and labor markets all continued to deteriorate this month."
Trump's announcement on Wednesday, April 2, placed tariffs of at least 10% on about 185 countries. He retreated on many of the duties one week later but escalated tariffs on Chinese goods to 145%, prompting China to put a 125% retaliatory tariff on the US.
Many key tariffs also remain in place, including 25% duties on imported aluminum, cars, light trucks, and steel. There's also a 25% tariff on Canadian and Mexican goods not covered by the United States-Mexico-Canada Agreement.
Trump has also promised "major" pharmaceutical tariffs, claiming the duties will push drugmakers to increase US production.
"When they hear that, they will leave China," Trump said at a National Republican Congressional Committee dinner on Wednesday, April 9. "They will leave other places because they have to sell. Most of their product is sold here and they're going to be opening up their plants all over the place."
Consumers across party lines are bracing for greater economic pain.
More Americans now expect unemployment to rise over the next year than at any point since the global financial crisis in 2009, Michigan's March survey found. That marks the fifth straight month of worsening job market expectations.
The unemployment worries have more than doubled from November 2024.
"This lack of labor market confidence lies in sharp contrast to the past several years, when robust spending was supported primarily by strong labor markets and incomes," said Hsu.
Trump's tariffs – even with some paused – threaten to send prices higher despite March's slightly lower inflation. Economists warn that the Federal Reserve will be reluctant to cut interest rates because of tariff-driven price increases and weak consumer sentiment.
Michigan's survey was conducted between Tuesday, March 25, and Tuesday, April 8, with interviews closing one day before Trump's tariff pause.
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