American consumers’ monthly confidence index has plummeted to a four-year low, throwing a wet blanket on an already shaky Donald Trump economy, according to a new survey.
It was even lower than expected.
In addition, Americans’ positive expectations “for income, business, and labor market conditions” in the coming year took a major dive, hitting its lowest level in 12 years, according to the survey released Tuesday by The Conference Board.
Consumer confidence is critically important to a healthy economy since Americans’ spending is its fuel. Worried Americans are far less likely to spend money on cars, homes, new furniture, vacations and clothing — expenditures that keep the economy percolating.
“Consumers’ optimism about future income — which had held up quite strongly in the past few months — largely vanished, suggesting worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations,” warned Stephanie Guichard, senior economist at The Conference Board.
Consumers’ monthly confidence index slid 7.2 points this month to 92.9, diving to its lowest level since January 2021, according to the survey.
The dip extends a drop that began in December shortly after Trump was elected president.
Americans’ positive expectations “for income, business, and labor market conditions” dropped 9.6 points to 65.2, the lowest level in 12 years, the survey found.
Americans polled are expecting both higher inflation this year as well as a recession in a classic “stagflation” situation when rising prices combine with stalled incomes.
Federal Reserve officials also believe the U.S. economy is heading that way.
The fall in confidence was driven by a decline in those 55 or older, but was also spread across income groups.
Trump’s on-again-off-again draconian tariffs are making consumers and business owners nervous as Trump also struggles against the courts to fire tens of thousands of federal workers, whose shrinking or vanishing paychecks are also bound to deal a blow to the economy.