U.S. one-year inflation expectations have soared to the highest level since 1981.

On April 25, the consumer confidence index fell for the fourth consecutive month, down 8% from March. Although the decline in the current situation indicator in April was modest, the expectations index fell sharply as personal finances and business conditions declined. Expectations have fallen sharply by 32% since January, the largest three-month percentage drop since the 1990 recession. The deterioration in expectations for middle-income households was particularly severe this month, with expectations for a wide range of people of different ages, levels of education, income and political affiliation. Consumers perceive risks in many aspects of the economy, in large part due to uncertainty over trade policy and a possible rise in inflation in the future. Labor market expectations remain gloomy. More worryingly, consumers expect their own income growth to slow in the coming year. The final one-year inflation rate expectation surged to 6.5% this month from 5.0% last month, the highest level since 1981, marking the fourth consecutive month of a sharp increase in inflation expectations of 0.5 percentage points or more. Long-term inflation expectations climbed to 4.4% in April from 4.1% in March.