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Consumer sentiment drops 32% in Q1, a 35-year record

Tariffs and inflation result in a pessimistic outlook on wages for 2025.

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less than 3 min read

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How low can you go?

Consumer sentiment is down once again—dropping 8% from March and a staggering 32% from January, according to the latest University of Michigan survey of consumer sentiment.

But this time economic anxieties crept into personal finances. Raise your hand if you think you’re going to get a raise this year. Yeah, us either. With tariff expenses and a recession looming, survey respondents weren’t expecting income growth. Less than half expected an increase in their wages this year.

“Consumers perceive risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming on the horizon,” director of the survey and economist Joanne Hsu said in a statement. “Most concerning for the path of the economy, consumers anticipate weaker income growth in the year ahead. Without reliably strong incomes, spending is unlikely to remain robust amid the numerous warning signs noted by consumers.”

Tariffs and inflation have obviously broken through to the average consumer, as 60% of respondents brought up tariffs spontaneously in their interviews. And it wasn’t just Trump-haters; 44% of Republicans and 59% of Independents brought up the tariffs.

Inflation was also still top of mind; consumers increased their inflation predictions from 5% in March to 6.5% in April.

The drop-off from January is the steepest three-month decline since 1990. Maybe it’s time to bring back Tamagotchis—they only eat virtual food and cost nothing but time, energy, and emotional distress when you inevitably kill them.

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