Americans are getting increasingly more pessimistic about US economic conditions. Many worry about the uncertainty brought by President Trump‘s policies and higher prices due to tariffs. This worry and uncertainty are the main drivers for lower expectations for the economy.
American Economic Expectations Hit a New Low
The consumer confidence index is a metric measuring the expectations and confidence of Americans for the near future. The consumer confidence index dropped in February to 100.1, the lowest since the COVID-19 pandemic. However, in the month of March that number continued to go down. In March the index fell to 92.9, indicating a very low level of confidence in the economy. Additionally, the expectations index, a separate index based on consumers short term perspective for income and market conditions went down to 65.2 in March. In the month prior this same index was at 72.9, which is still very weak. Experts claim that when this index is below 80, a recession may be in the near future.
Yelena Shulyatyeva, senior economist at Conference Board said “One of the most significant developments that we have seen was a decline in financial situation expectations from consumers.” Shulyatyeva went on to say “So that seems to suggest that all this uncertainty around economic outlook is really starting to weigh on consumers’ assessment of how they will fare going forward.”
There is, however, some things to be looking forward to. The Conference Board noted that respondents perspective on the current labor market improved. That seemed to be the only metric moving in a positive direction, as consumer inflation expectations rose to 6.2% from 5.8%. Additionally, for the first time since 2023, consumers have pessimistic economic expectations for the stock market. Only 37.4% of respondents believe stocks will rise from 2025 to 2026.
Consumers Lacking Confidence
Those expecting a lower income in the next year increased from 12.8% in February to 15.5% in March. This marks the highest percentage of respondents expecting a lower income since late 2022. Of this, Tom Simons, economist at Jefferies, gave his perspective. He said “This data suggests that consumers lack confidence in their job security such that they can ask for higher wages…The direction of travel in this indicator is concerning, but the levels aren’t quite at thresholds that we expect would trigger big shifts in spending behavior.”
Fed Chair Jerome Powell also chimed in. He said “The relationship between survey data and actual economic activity hasn’t been very tight”, and that “There have been plenty of times where people are saying very downbeat things about the economy and then going out and buying a new car. But we don’t know that that will be the case here. We will be watching very carefully for signs of weakness in the real data.”
