The University of Michigan consumer sentiment index dropped to 62.6 in April from 69.5 in March - its lowest level since 1982. The market was expecting the index to remain unchanged from the early April reading of 63.2.

The current conditions component declined to 77 in April from 84.2 in March. The expectations index dropped to 53.3 from 60.1 in March. The one-year inflation forecast was unchanged from the early April reading of 4.8%. This represented the highest level since 1990. The five-year inflation forecast also increased, rising to 3.2% from 2.9%.

The decline in the University of Michigan consumer sentiment index follows a deterioration in the ABC Consumer Comfort Index and a sharp decline in the RBC CASH (Consumer Attitudes and Spending by Household) survey.

The level of the University of Michigan consumer sentiment index is firmly in the range historically associated with recession, putting significant downside risk on our consumer spending forecast calling for slightly positive growth in the first half of the year.