Courtney Brown

Is he talking the R word on the horizon?

Yeah, I think recession is a real risk.

If the war and all its disruptions continue for another month.

I'm Mitchell Hartman for Marketplace.

Rewind to just before the U.S.

and Israel launched strikes on Iran, and consumer sentiment was improving.

Joanne Xu runs the University of Michigan's Consumer Sentiment Survey.

She saw a sharp trend reversal after the bombs started falling.

By the time the survey closed on March 23rd, overall sentiment was down 6%.

Meaning consumers expect the Iran conflict to resolve relatively quickly.

And that may be why, for now, consumer behavior has not changed much.

Carnival Cruise Lines, for example, just reported banner bookings.

Bank rate analyst Ted Rossman is still concerned, though, because the University of Michigan's sentiment survey showed a 9% drop among higher-income consumers, threatening the K-shaped economy.

Eventually.

For now, the economy is still strong, Rossman says.

Another warning sign is the rise in consumers' inflation expectations from 3.4 to 3.8 percent a year from now.

Neil Mahoney is an economist at Stanford.

Mahoney says some of this pain is already baked in.

He expects consumer sentiment to sour further next month.

I'm Novosafo for Marketplace.