Americans are increasingly worried about their work and finances as the Trump administration's trade policy and government cuts are concerned about the economy.
Consumer confidence has fallen to this month's lowest level since January 2021, and the conference committee reported Tuesday, extending the ongoing decline since President Trump was elected last fall. The short-term outlook for “income, business and labor market conditions” has declined to the lowest reading in 12 years, the business group reported, reporting consumers are worried about the worsening economic situation next year.
Economists have warned that Trump's plans to wipe out tariffs on the largest US trading partner could rekindle inflation. Whipping from changes in trade policy and investors' concerns over a potential slowdown in the US economy prompted the stock market divestment earlier this month. The survey shows households are enduring higher inflation than next year, with 12 months of inflation expectations rising to 6.2% from the 5.8% outlook in February. (Inflation rate was 2.8% in the last 12 months, according to the February Consumer Price Index.)
Consumers are “surprised” by the Trump administration's trade war, cutting the federal government with so-called government efficiency and recent stock market sales, according to Bill Adams, chief economist at Comerica Bank.
“If people fear their work, they will cut discretionary spending on holidays and going out, and delay large purchases like new homes, cars and appliances,” Adams said. He added that it is difficult to predict the length of consumer sentiment recession.
Stephen Milan, chairman of the White House Economic Advisors Council, carried out a decline in consumer confidence in an interview with CNBC on Tuesday. “People often have their political views influence their views on the economy,” he said.
The latest conference committee survey added to the growing evidence that uncertainty about tariff policy gives consumers confidence about the economic outlook and makes them more concerned about inflation. University of Michigan data released this month showed consumer sentiment that plunged 11% from February as Americans of all ages, income groups and political affiliations fell even further downbeats.
Executives at some companies have also warned about a backlog of consumer spending. Delta cut financial forecasts for the first three months of the year, citing declining demand for domestic travel, but clothing retailer Burlington warned investors that tariffs could “harm discretionary spending.”
