Consumer sentiment was not as disastrously bad in the final April reading but it remained down a remarkable 8 percent from March. The sentiment index came in at 52.2 in the final April report versus 50.8 in the preliminary April figure and 57.0 in the March final. The Econoday consensus looked for 50.5 for the final April index.

One-year inflation expectations came in at a horrifying 6.5 percent in the final April report versus 6.7 percent in the preliminary April, and versus what now seems like a moderate 5.0 percent in March. That is up from 4.3 percent in February and 3.3 percent in January. The University of Michigan said inflation fears seemed to diminish a bit after President Trump's April 9 partial"pause" in his universal tariffs unveiled on April 2.

The report cited consumer worries about tariffs and rising inflation as the primary reason for falling sentiment. Views of current conditions are down but relatively stable compared with expectations that have fallen out of bed, down 32 percent since January. This is the steepest three-month percentage decline seen since the 1990 recession. Consumers are increasingly bearish on expectations for their personal finances and business conditions.

After an unexpectedly nasty 11 percent drop in the preliminary April reading to 50.8 from 57.0 in March, forecasters see the index relatively steady at 50.5 in the final April report. One-year inflation expectations are seen unrevised at a shocking 6.7 percent from the preliminary April report. That is up from 5.0 percent in March, 4.3 percent in February, 3.3 percent in January and 2.8 percent in December, all reflecting tariff effects.

The University of Michigan's Consumer Survey Center questions households each month on their assessment of current conditions and expectations of future conditions. Preliminary estimates for a month are released at mid-month and are based on about 420 respondents. Final estimates are released near the end of the month and are based on about 600 respondents.

The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer sentiment index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.