Consumers are growing increasingly fretful about the state of the economy and worried about the prospect of higher prices, a worrying signal for restaurants already dealing with a diner reluctant to eat out as often as they want.
Consumer confidence fell 11% in April, according to the University of Michigan’s consumer sentiment index. It was the fourth straight month the index has fallen, a period in which consumer sentiment has fallen 30%.
What’s more, consumers are increasingly worried about the state of their jobs and the prospects of inflation. Two-thirds of consumers expect unemployment to rise in the year ahead, the fifth straight month that expectation has increased. The percentage of consumers who expect unemployment to increase has doubled since November, according to the report.
Meanwhile, consumers expect prices to rise 6.7%, the highest reading since 1981 and up from 5% last month. Consumer expectations for inflation have increased at an unusually large rate for four straight months.
Consumer confidence is a key, early indicator of economic sentiment, and this is the first one that has come in the aftermath of President Trump’s sweeping “Liberation Day” tariff announcement that sent global markets roiling and set the stage for a rewrite of the global trade order. The survey was taken from March 25 through April 8, closing before Trump’s partial reversal of those tariffs.
Tariffs are import taxes that are widely expected to eventually drive up consumer costs by increasing the cost of everything from imported beer to electronic components. For restaurants, however, the biggest concern may be the impact on consumer spending. If consumers are worried about their jobs and prices, they may pull back on spending for a time even if nothing happens.
The survey shows that Trump’s tariff pronouncements, along with the severe reaction of the stock and bond markets, are taking their toll on the U.S. consumer.
Restaurants have struggled for more than a year with a consumer who has been frustrated by high prices and more reticent to dine out. Total chain restaurant sales last year increased just 3%, according to data from Restaurant Business sister company Technomic. Adjusted for menu price increases, real sales among chains fell 0.6%.
Many chains have complained that the difficult operating environment has persisted into 2025. Technomic in reaction has lowered its projections for foodservice sales for this year, largely wiping out a sense of optimism from late in 2024.
The University of Michigan index features some troubling indications that economic concerns have spread far beyond the low-income diner that had been cutting back the most. According to the survey, consumer confidence declined across age, income, education, geographic region and political affiliation.
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