Americans have never been this pessimistic about the economy. The University of Michigan's consumer sentiment index crashed to 47.6 this month, breaking through every floor on record.

Lower than 2008. Lower than the 1980s recession. Lower than the pandemic's darkest months.

What Drove the Collapse

The trigger was the Strait of Hormuz blockade and the military conflict that started February 28. Gas prices surged 40% in six weeks, crossing $4.16 per gallon nationwide.

That kind of price shock doesn't just drain wallets - it changes how people see their financial future.

Year-ahead inflation expectations jumped from 3.8% to 4.8%, a 100-basis-point leap in a single month that blew past the 4.2% consensus.

Survey director Joanne Hsu noted that many consumers blame the Iran conflict for unfavorable changes to the economy. The damage cut across every group - age, income, political party.

Democrats fell to 31.8. Republicans dropped to 87.1. Both retreated sharply.

The Ceasefire Caveat

Here's the catch: 98% of these interviews happened before the ceasefire was even announced. People were already scared before there was any good news.

The final April reading, due later this month, could show some recovery if the ceasefire holds. But the depth of this decline suggests the damage goes beyond gas prices - it's about trust.

What to Watch

Longer-run inflation expectations climbed to 3.4% from 3.2%. That's the number that keeps Fed officials up at night.

When households permanently believe inflation will be higher, they demand higher wages, businesses raise prices, and you get a cycle that's incredibly hard to break.