In April, US consumer sentiment took a significant hit following the upheaval caused by Donald Trump’s trade war, leading to a sharp decline in the index of consumer sentiment. This drop, the largest since the 1990 recession, reflects widespread concerns across various demographic groups about the economic outlook. Consumers are particularly wary due to uncertainties surrounding trade policies and the potential for inflation resurgence.

The index of consumer sentiment plummeted to 52.2 in April from 57 in March, with expectations of inflation soaring to 6.5%, the highest level seen since 1981. Despite Trump’s assurances that tariffs would be profitable and not lead to price hikes, many Americans remain unconvinced of the efficacy of his trade strategies.

Investor confidence has been rattled by Trump’s trade policies, resulting in sell-offs in stock and bond markets. While Trump recently hinted at reducing Chinese tariffs, consumer sentiment continues to decline, indicating lingering apprehensions about the economy’s future trajectory.

The combination of heightened inflation expectations and anticipated slower income growth has led consumers to adopt a cautious approach towards spending, potentially signaling a slowdown in economic activity. Joanne Hsu, director of the surveys of consumers, emphasized the importance of robust incomes in sustaining consumer spending amidst prevailing economic uncertainties.

Overall, the persistent decline in consumer sentiment underscores the challenges posed by the ongoing trade war and its broader implications for the US economy, highlighting the need for effective policy measures to restore confidence and stability.