Iran War Has Consumers Feeling Worse About Economy Than They Did During Great Recession, Biden Era

Consumer confidence plunged to a record low on Friday as the economic fallout from the war in Iran continued.

The University of Michigan’s consumer sentiment index recorded its lowest reading on record, dropping to 47.6, down 10.7% from the month prior. The decline in consumer sentiment was attributed to anxieties surrounding the war in Iran, with respondents also expressing concern that inflation will increase further.

“Many consumers blame the Iran conflict for unfavorable changes to the economy,” the survey’s director, Joanne Hsu, wrote in a report about the survey. Consumers responded by saying they now expect inflation to rise 4.8% in the next year, a full percentage point jump from March’s survey.

Consumer sentiment is a closely watched economic indicator given that consumer spending accounts for roughly two-thirds of America’s gross domestic product each year. The University of Michigan consumer sentiment index previously registered a 6% decline in March, with declines seen across all ages and political parties.

The University of Michigan index reading was even lower than it was during 2008’s Great Recession when consumers were forced to confront harsh economic conditions that resulted from massive defaults in the housing and financial sectors and was also lower than it was during former President Joe Biden’s administration, when inflation peaked at 9.1% following the passage of massive spending bills on COVID and the climate.

The consumer price index