Consumer sentiment holds steady amid renewed concerns over high prices

April 26, 2024

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.

Joanne Hsu
Joanne Hsu

“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.

About the surveys

The Surveys of Consumers is a rotating panel survey at the University of Michigan Institute for Social Research. It is based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by phone. The minimum monthly change required for significance at the 95% level in the Sentiment Index is 4.8 points; for the Current and Expectations Index, the minimum is 6 points.