The University of Michigan’s preliminary April consumer sentiment index plunged to a record low of 47.6. This figure marks a sharp decline from the 53.3 reading recorded in March. The results fell significantly below all economic forecasts.
Growing anxiety over persistent inflation drove the dramatic drop. Gasoline prices surging above $4 a gallon are eroding household purchasing power. Consumers now anticipate cutting back on discretionary spending.
Inflation expectations for the coming year jumped significantly. Current financial situation ratings matched the worst levels seen since 2009.
This collapse in confidence signals a bearish outlook for the consumer discretionary sector. Companies within the XLY ETF face significant demand headwinds as households tighten budgets.