If you've been feeling like the economy is broken, you're not alone. And now we have the numbers to prove it.
The University of Michigan's consumer sentiment index just crashed to 47.6 - the worst reading in the survey's history. To put that in perspective, this is lower than the 2008 financial crisis. Lower than the pandemic lockdowns. Lower than any recession we've measured.
Economists expected a reading of 52.0. We got 47.6 instead. That's not a miss - that's a warning siren.
What's Driving the Collapse?
Two words: gas prices. The Iran conflict sent fuel prices rocketing from $2.89 to $4.15 per gallon nationally, and Americans are feeling it every time they fill up. Joanne Hsu, the survey director, noted that consumer sentiment "sank about 11% this month" with one-year business conditions projections "plunging about 20%."
But here's where it gets worse: the damage isn't just about higher gas prices today. It's about what people think is coming next.
Inflation Expectations Are Breaking Bad
One-year inflation expectations jumped from 3.8% to 4.8% - the largest monthly spike since April 2025. Five-year expectations rose to 3.4%, the highest since November 2025.
If you're wondering why the Fed should care about what regular people expect inflation to be, here's why: expectations become self-fulfilling. When workers expect 5% inflation, they demand 5% raises. When businesses expect their costs to rise 5%, they raise prices 5%. It's a vicious cycle.
The Fed's 2% inflation target? Forget about it. At least for now.
What This Means for You
Current conditions fell to 50.1 from 55.8 - a brutal 16.2% drop year-over-year. That's how people feel about the economy right now. But future expectations dropped to 46.1 from 51.7. Translation: people think things are bad, and they're about to get worse.
According to the survey data, respondents showed a with many directly blaming the Iran conflict for economic deterioration.
