Consumer confidence in the U.S. has fallen sharply, signaling rising anxiety among Americans about the economy’s direction. According to the latest survey by the Conference Board, the consumer confidence index dropped by 7.2 points in March, reaching 92.9—the lowest level since January 2021. This marks the continuation of a decline that began after the 2024 presidential election and mirrors February’s 7.3-point slide, reinforcing a broader trend of economic pessimism.
The data reveal increasing fears about inflation and the potential for a recession. Expectations for the next 12 months fell significantly, with the Conference Board’s expectations index dropping 9.6 points to 65.2—the lowest level in over a decade. A growing share of respondents expect the U.S. economy to enter a recession within the next year, holding steady at a nine-month high. The dual threat of slower growth and rising prices has fueled concerns that the U.S. could be entering a period of stagflation—a rare and difficult economic condition.
Trade tensions appear to be contributing to consumer unease. President Donald Trump’s economic agenda, marked by aggressive tariff policies, has increased uncertainty. In March, Trump imposed 25% tariffs on goods from Mexico and Canada, only to delay enforcement after business backlash. The European Union’s retaliatory tariffs on U.S. metals were met with Trump’s threat of a 200% tariff on European alcohol. More “reciprocal” tariffs are expected in April, though reports suggest they may be softened amid pushback from American industries.
These unpredictable policy shifts have made it harder for consumers, businesses, and investors to plan ahead. The Federal Reserve has also adopted a cautious stance, holding interest rates steady as it evaluates the cumulative effect of Trump’s policies. Atlanta Fed President Raphael Bostic said this week that inflation progress is “bumpy,” and that the central bank may delay any potential rate cuts. The Fed’s real-time economic tracker shows that GDP may contract this quarter, driven by a January cold snap that disrupted spending and industrial output.
Despite weakening sentiment, the U.S. labor market continues to show resilience. The economy added 151,000 jobs in February, and the unemployment rate remains low at 4.1%. Economists say strong employment could help support consumer spending and offset some of the confidence decline. However, rising short- and long-term inflation expectations are raising concerns at the Fed. Although Chair Jerome Powell noted that long-term expectations remain “well anchored,” any significant rise could complicate the Fed’s balancing act between supporting growth and containing inflation.
In summary, the latest data underscores growing tensions in the U.S. economy. Falling consumer confidence, mixed with inflation concerns and policy unpredictability, is creating a fragile economic environment. While the labor market remains a bright spot, it may not be enough to keep the broader economy on firm footing if pessimism deepens. With upcoming trade decisions and inflation data on the horizon, the coming months will be crucial in determining whether these concerns evolve into a full economic downturn.
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