U.S. Consumer Confidence Sinks to Two-Year Low as Tariff Worries Mount
The index fell to 50.8, the weakest reading since June 2022. Thats a steep fall from Marchs 57 and far below economists forecast of 53.8.
Rising concerns over President Trumps sweeping tariffs appear to be a major driver. Inflation expectations for the year ahead jumped to 6.7% the highest since 1981. Just a month ago, that number was 4.9%. Back in January, it was 3.3%.
Long-term inflation worries climbed too. Consumers now expect 4.4% inflation over the next five to 10 years, up from 4.1% in March.
The survey, conducted between March 25 and April 8, captured early reactions to Trumps April 2 reciprocal tariff announcement. It did not, however, reflect responses to his 90-day pause on select levies or this weeks hike in China tariffs.
Recession Risks Are Rising, Say Consumers
Consumers report multiple warning signs, said Joanne Hsu, director of the University of Michigans survey. Business conditions, incomes, Inflation An economic concept referring to the rise in prices of goods and services, leading to a decrease in the purchasing power of fiat currency.
Since December, sentiment has dropped over 30% a signal that households now view trade policies as a lasting economic threat.
Harry Chambers, assistant economist at Capital Economics, echoed that view. Households appear to have come to the same conclusion as markets: the tariffs will do lasting damage to the U.S. economy, he said in a note to clients.
Inflation Data Tells a Slightly Different Story For Now
Despite growing fear, inflation metrics remain relatively tame. The Bureau of Labor Statistics said core Producer Price Index (PPI) rose 3.4% in April, slightly lower than Marchs 3.5%. Core Consumer Price Index (CPI) also cooled, rising 2.8% year-over-year the slowest pace in four years.
Meanwhile, markets have been rattled. Even after Wednesdays historic rebound, the S&P 500 remains down over 7% since Trumps April 2 announcement.
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