One thing that’s moved markets 

… is the journey of consumer sentiment, which dropped to its lowest level since mid-2022. 

That’s according to the Conference Board’s monthly survey, which gauges the U.S. consumer's attitudes and spending plans, as well as expectations for inflation, stock prices, and interest rates.¹ 

April’s write-in responses show consumers are still concerned about prices, particularly for food and gas. Grocery prices saw a 2.2% increase year-over-year in April, and the week of the report’s release, nationwide gas prices were at $3.50, up from $3 at the start of the year.^2,3 

As a result of price pressures, consumers also say they’re inclined to cut back on discretionary spending to focus on essentials like childcare, education, and healthcare. Notably, the slide in confidence – and indicated shifting spending – is happening even as consumer spending stays strong.⁴ 

On the business side, consumers' expectations for stock gains fell slightly from March, while expectations for higher interest rates increased. One bright spot: Sentiment toward current business conditions did edge higher. 

Although sentiment datapoints are subjective, they can be as good a barometer as hard data: How consumers feel about their financial standing can be a leading indicator of their future spending choices and, by extension, the overall health of the economy. 

Exploring the driving data 

In the moment, consumers’ attitudes remain mostly unchanged from the previous month, with the so-called “present situation index” at 143 in April, considered a relatively optimistic level.¹ 

Instead, the significant downslide came from the six-month outlook, which fell from 74 to 66.4, the lowest reading since July 2022.¹ A reading below 80 often signals a near-term recession. 

Since its peak in 2018, consumer sentiment has been on a decline. There have been a couple of notable bounces, such as in the latter half of 2023, when inflation and labor market concerns tempered and the economy showed unexpected growth. But in 2024, sentiment has tumbled.⁵ 

This latest slide in sentiment could be a bellwether for more challenges to come. As Americans contend with persistent inflation and heightened interest rates, discretionary spending may hit some roadblocks. If consumers’ suspicions about the labor market come to pass, we may also see slower job growth and higher unemployment, which could add to those spending headwinds. 

There’s a silver lining though: If an economic downturn comes to pass, it would likely bring inflation down with it, potentially putting interest rate cuts back on the table. 

And a few top headlines 

The Japanese yen hit a 34-year low against the dollar.⁶ 

• Although it rebounded slightly to 156 yen per dollar, this is good news for international travelers. Every U.S. dollar will buy more goods and services in Japan than when the exchange rate was lower. Imported Japanese products may also be more affordable. 

Gas prices in the U.S. have risen since the start of the year, with March prices marking a 10.3% increase from December 2023.

• As of March, Americans were spending an average of $52.25 per transaction at gas stations. New York and Alaska had the highest average transaction at $82.75 and $73.45, respectively.

Walmart is launching a new private-label food brand called Bettergoods aimed at delivering quality, chef-inspired food at a low price.⁷ 

• Walmart's 300 Bettergoods items — including snacks, beverages, and coffee all under $15 — could offer a balance of quality and value to budget-concerned consumers given the high rate of food inflation over the last few years.

What to be on the lookout for next week 

Another consumer sentiment measure, this one from the University of Michigan, will be released on Friday, May 10. The University of Michigan's consumer sentiment index from the previous month was mostly unchanged, hovering just below its highest level since June 2021.⁸ 

With this week’s consumer confidence index showing a notably decline, this next read on consumers could indicate if that report signaled a temporary blip or a steady trend.