US consumer confidence plunges to four-year low

As Americans’ opinions about their financial futures dropped to a 12-year low, fueled by growing concern over tariffs and inflation, consumer confidence in the United States has continued to decline sharply in 2025.

The Conference Board reported on Tuesday that its consumer confidence index dropped 7.2 points to 92.9 in March, marking its lowest reading since 2021 and its fourth consecutive monthly decline. According to a survey by FactSet, the reading was below analysts’ expectations for a reading of 94.5.

The business group discovered that the nation’s short-term expectations for income, business, and the job market dropped 9.6 points to 65.2%.

That reading is the lowest in 12 years and is significantly below the 80-bar mark, which The Conference Board believes could point to a potential recession in the near future. The board reported that the proportion of US consumers who are anticipating a recession is still at a nine-month high.

Consumers’ optimism about the future of income, which had risen significantly over the past few months, appears to have begun to be reflected in consumers’ opinions of their personal circumstances, according to Stephanie Guichard, senior economist at The Conference Board.

Economists have criticized US President Donald Trump’s on-and-off-again tariffs, saying they create confusion and uncertainty that, in their opinion, make business planning difficult.

Trump on Monday stated that some nations might receive breaks and that not all of his threatened dutys would be imposed on April 2; however, he also stated that tariffs on imported cars were going to be implemented soon.

Consumers are agitated, according to High Frequency Economics’ Chief Economist Carl Weinberg. We will express our opinion that this is at great personal risk because of the chaos in Washington. Consumer sentiment has decreased since the November election, which is no longer a coincidence.

The University of Michigan’s consumer sentiment measure, which has lost all the gains made in the wake of Trump’s victory in November, saw a similar decline in confidence earlier this month.

“Effectful pressure” on profits

The Trump administration claims that the souring mood among Americans doesn’t necessarily reflect what is actually happening in the economy. This argument is consistent with what former US President Joe Biden’s administration officials claimed, which said high inflation stifled consumer confidence without stifling growth.

However, some of the biggest retailers in the country are telling a different story after observing a shift in consumer behavior.

Americans are trying to offset higher prices by finding bargains, which has helped Walmart prosper. However, the nation’s largest retailer cut its profit forecast for this year until late last month. The business’s expectations for 2025 do not account for the potential impact of tariffs, and its sales outlook was also conservative.

During the crucial holiday quarter, Target’s sales and profit decreased, and the company predicted that tariffs on Mexico, Canada, and China would cause “meaningful pressure” on its profits in part.

Many Macy’s, Best Buy, Abercrombie &amp, Fitch, Dollar General, and other retailers now have more realistic expectations for 2025, with many citing “economic uncertainty.”

According to the Conference Board’s survey, home and car purchases are on the decline. In light of respondents’ heightened concern for the future, intentions to purchase expensive items like appliances increased, which is somewhat surprising. That, according to the board, could indicate a desire to purchase before the tariffs start soaring and prices go up.

Despite returning from its highs during the post-pandemic rebound, inflation has remained above the target of the Federal Reserve of two percent. Americans are concerned about spending as concerns about the economy grow, combined with the recently announced tariffs on many imported goods.

At the end of 2024, consumers had begun to make more money than they had before the year-end holidays. However, in January 2025, US retail sales abruptly decreased despite the fact that some of the blame was borne by cold weather.

After the severe decline in the first half of the year, the government reported earlier this month that Americans only slightly increased their spending.

The board reported on Tuesday that the consumer’s opinion of the current situation dropped by 3.6% to 134.5.

The consumer confidence index measures both Americans’ perceptions of the country’s current economic environment and their outlook for the upcoming six months.

Source: Aljazeera