(NewsNation) — After rising to its highest level in nearly three years in March, consumer sentiment ticked down in April as Americans grew more worried about inflation.
The University of Michigan’s index slipped to 77.2 this month, down from 79.4 in March, according to new survey data released Friday.
It’s a sign consumers feel slightly worse about their economic situation — and future prospects — compared to a month ago, although attitudes are better than a year ago (68.5).
April’s reading reflects a concern that the slowdown in inflation may have stalled, Surveys of Consumers Director Joanne Hsu said in a release.
After a hot inflation report earlier this month, Americans expect prices to go up 3.2% over the next year — the most pessimistic outlook since November, per the latest data.
For the third month in a row, a rising share of consumers mentioned food or grocery prices, which have surged faster than overall inflation in recent years. The share of consumers who said high prices have eroded their standard of living also ticked up, reaching 38% in April from 33% in March, the release said.
As has consistently been the case, there were wide partisan differences in how people viewed the economy. Democrats and independents felt roughly the same about the economy in April as they did in March, while Republicans became more pessimistic. However, sentiment across all three groups is higher now than in each month of 2022.
What’s happened in the economy over the last month?
Inflation: Consumer prices continue to rise faster than the Federal Reserve’s target rate and went up 3.5% year-over-year in March. That’s better than the 9.1% high in June 2022, but in recent months, the annual pace of inflation has accelerated, dampening hopes that the problem is under control.
Stubborn inflation means interest rates may stay higher for longer, which impacts everything from mortgage rates to credit card APRs.
- The Fed’s preferred inflation gauge, the PCE price index, also ran hotter than expected in March, according to new data released Friday.
Economic Growth: The nation’s economy slowed sharply in the first quarter to a 1.6% annual pace, down from 3.4% at the end of 2023, the Commerce Department reported Thursday. Despite the slowdown, consumer spending grew at a solid 2.5% annual pace, fueled by services like health care and insurance.
Mortgage Rates: After dipping below 7% in March, the average 30-year fixed mortgage rate rose to 7.17% in April, the highest level since November, according to mortgage buyer Freddie Mac.
Elevated rates have worsened the “lock-in effect,” where homeowners with low mortgage rates are unwilling to sell because they won’t find a better deal. It’s a trend that’s compounded the nationwide housing shortage.
Labor Market: The economy added another 303,000 jobs in March, the largest gain since last May. Much of that was driven by gains in health care, government and construction roles.
The unemployment rate was 3.8% in March, little changed from the month prior and still near historic lows. Major companies like Tesla and Nike announced job cuts in April, but through the first two months of 2024, total layoffs have remained below pre-pandemic levels.