Never Mind the Sentiment, Consumers Are Alright

American consumers continue to spend robustly despite surging gasoline prices and gloomy economic sentiment, with household spending rising by half a percent in April and demonstrating remarkable resilience in the face of oil price shocks triggered by the U.S. conflict with Iran.

According to Breitbart News, consumer spending climbed 0.5 percent in April based on personal consumption expenditure figures released by the Bureau of Economic Analysis on Thursday. In the two months following the outbreak of hostilities with Iran and the subsequent spike in fuel costs, spending has increased 1.49 percent, which annualizes to a substantial 9.3 percent gain. Year-over-year consumer spending stands 3.9 percent higher than April of the previous year.

The data reveals that Americans are not curtailing their spending habits despite a 25 percent surge in energy prices during March and April. Many economists had anticipated that soaring costs at the pump would force households to reduce discretionary expenditures elsewhere, but that pullback has failed to materialize.

Broad-Based Spending Growth Across Categories

Durable goods spending rose 1.7 percent over the March-April period, representing an annualized increase of 10.7 percent. Compared to the same period last year, Americans spent 3.2 percent more on durable goods overall.

Motor vehicles and parts spending climbed 2.2 percent, or 14.1 percent annualized, even after accounting for a modest decline in April alone. Furnishings and durable household equipment dipped slightly in April but remain up 1.19 percent across the two-month window, annualizing to a 7.4 percent gain.

Discretionary spending categories, where economists would typically expect retrenchment during periods of consumer strain, instead showed solid advancement. Recreational services spending increased 1.9 percent during the two-month period, an annualized gain of 12 percent. Food services and accommodations climbed 0.95 percent for the month, which translates to a 5.8 percent annualized rate.

The weakest categories were clothing and footwear, which grew just 0.37 percent over two months, and health care services, where spending advanced 0.48 percent. However, apparel and footwear spending was up 7.3 percent in April compared to a year earlier, suggesting recent softness may reflect a temporary pause after an earlier shopping surge rather than genuine consumer distress. Health care services spending similarly shows 5.9 percent year-over-year growth.

The Sentiment-Spending Disconnect

This spending expansion occurred even as the University of Michigan’s consumer sentiment index plummeted 12 percent from an already dismal 56.6 in February to 49.8 in April. In May, sentiment fell another 10 percent to an all-time low of 44.8. Americans were simultaneously increasing purchases across the economy while reporting to pollsters that economic conditions were catastrophic.

The divergence appears partly rooted in partisan politics, as Breitbart News reports. The University of Michigan sentiment index for Democrats crashed to 32.8 in April, lower than during the 2008 financial crisis or the pandemic lockdowns of President Trump’s first term. A recent Economist/YouGov poll found that 55 percent of Democrats believe the country is in recession, with another 29 percent expecting one within twelve months.

Democratic pessimism extends beyond gas prices. Sentiment among Democratic respondents was actually lower in November 2025, and expectations gauges were worse in February, March, and April of the previous year. A substantial portion of Democrats appear convinced, or at least willing to claim, that the economy is collapsing simply because Donald Trump occupies the White House.

Yet partisanship does not explain the entire picture. Sentiment among independents remains dismal, and Republican sentiment deteriorated in March, April, and May. Gas prices account for some negativity, but a more compelling explanation may be that consumers now exist in a permanent state of economic anxiety due to the cumulative trauma of successive crises: the dot-com bust, the housing bubble collapse, the financial crisis, the stagnation of the Obama years, pandemic lockdowns, and what conservatives call the Bidenflation catastrophe.

Strong Fundamentals Support Consumer Activity

Current economic fundamentals present a starkly different picture than sentiment surveys suggest. Unemployment remains very low and has been for an extended period. Jobless claims sit at rock-bottom levels. Corporate profits and share prices have reached record highs. Business investment is booming, driven by the combination of Trump’s tax and regulatory policies alongside the artificial intelligence infrastructure buildout. Businesses anticipate expanding payrolls and accelerating sales growth.

When assessing economic health, actual activity carries more weight than sentiment. The latest data from recent months indicates that economic activity on both the demand and supply sides continues rising, regardless of what Americans tell pollsters about their feelings.

With information from Breitbart News