What's happened
Consumer confidence in the US has plummeted to its lowest level since January 2021, driven by fears of recession and rising inflation. The Conference Board's index fell to 92.9 in March, with expectations for income and job conditions dropping significantly. Analysts warn that this decline could impact consumer spending and economic growth.
What's behind the headline?
Economic Sentiment Decline
- The Conference Board's consumer confidence index fell 7.2 points to 92.9, the lowest since January 2021.
- Expectations for income and job conditions dropped to a 12-year low, indicating widespread concern about future economic stability.
Impact of Tariffs
- Trump's proposed tariffs are seen as a major factor contributing to inflation fears, with consumers bracing for higher prices on essential goods.
- Federal Reserve Chair Jerome Powell noted that the uncertainty surrounding these policies is likely to delay economic progress.
Wealth Effect and Consumer Spending
- The stock market's decline has also contributed to a decrease in consumer spending, as the wealth effect suggests that falling asset values can lead to reduced consumer confidence and spending.
- Analysts warn that if consumer sentiment does not improve, it could lead to a broader economic downturn, as spending accounts for two-thirds of US economic activity.
What the papers say
According to the New York Times, 'Consumer confidence tumbled this month to its lowest level since January 2021,' reflecting growing fears about the economy. The Conference Board's report highlighted that 'Americans’ positive expectations for income, business, and labor market conditions took a major dive.' Meanwhile, Business Insider UK noted that 'the uncertainty with Trump's plans has kept markets fluctuating for weeks,' indicating a direct correlation between political decisions and economic sentiment. Additionally, The Guardian reported that 'worries about the impact of trade policies and tariffs in particular are on the rise,' further emphasizing the connection between consumer confidence and government policy.
How we got here
The decline in consumer confidence follows a series of economic uncertainties, including President Trump's proposed tariffs on key trading partners. These policies have raised inflation fears and created a climate of uncertainty among consumers and businesses alike, leading to a significant drop in economic sentiment.
Go deeper
- What are the implications of the declining consumer confidence?
- How might Trump's tariffs affect everyday Americans?
- What can be done to improve consumer sentiment?
Common question
-
Why is US consumer confidence at a four-year low?
Consumer confidence in the US has recently dropped to its lowest level since January 2021, raising concerns about the economic outlook. This decline is attributed to various factors, including inflation and trade policies. Below, we explore the reasons behind this downturn and its potential implications for the economy.
-
Why has US consumer confidence dropped to a 12-year low?
US consumer confidence has recently hit its lowest point since January 2021, raising concerns about the economic outlook. This decline is attributed to fears of recession and rising inflation, prompting many to wonder how this will affect consumer spending and the overall economy. Below are some common questions regarding this significant drop in consumer confidence.
-
What are the implications of Gérard Depardieu's trial for the #MeToo movement?
Gérard Depardieu's trial for alleged sexual assault marks a pivotal moment for the #MeToo movement in France. As the first high-profile case to reach court since the movement gained momentum, many are questioning its potential impact on future cases and societal attitudes towards sexual misconduct. Below, we explore key questions surrounding this significant trial.
-
What is Causing the Decline in US Consumer Confidence?
US consumer confidence has hit its lowest point since January 2021, raising concerns about the economy's future. This decline is influenced by various factors, including fears of recession and rising inflation. Understanding these elements can help us grasp the potential impact on consumer spending and the broader economic landscape.
More on these topics
-
The United States of America, commonly known as the United States or America, is a country mostly located in central North America, between Canada and Mexico.
-
Donald John Trump is an American politician, media personality, and businessman who served as the 45th president of the United States from 2017 to 2021.
-
Delta Air Lines, Inc., typically referred to as Delta, is one of the major airlines of the United States and a legacy carrier. It is headquartered in Atlanta, Georgia.
-
The Goldman Sachs Group, Inc., is an American multinational investment bank and financial services company headquartered in New York City.