U.S. Consumer Confidence Is Currently At a 12-Year Low. And Many Think The Worst Is Yet to Come

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This month, U.S. consumer confidence fell to its lowest level in 12 years, according to a report by the Conference Board. The widely followed index dropped 7.2 points to 92.9, reflecting growing economic anxiety among Americans. This marks the fourth straight month of decline and underscores concerns over trade tensions, inflation, and weakening purchasing power. Economists surveyed by Dow Jones had expected a reading of 93.5.

Outlook Dims Sharply as Expectations Collapse

The biggest concern wasn’t just how Americans feel today—it’s how pessimistic they’ve become about tomorrow. The Conference Board’s Expectations Index, which tracks how consumers view income, business conditions, and job availability over the next six months, tumbled by 9.6 points to 65.2. That’s the lowest reading since March 2013 and well below the 80-point threshold often associated with looming recession risks.

Stephanie Guichard, senior economist at the Conference Board, said optimism about future income has “largely vanished.” While some households held out hope in prior months, that confidence appears to be evaporating fast. Now, many are bracing for more economic pain.

Tariffs, Trade Chaos, and the Inflation Squeeze

Recent developments in U.S. trade policy have only added to the pressure. President Trump’s tariff strategy has created an unpredictable business climate, and consumers are starting to feel the impact. Tariffs on Canadian and Mexican goods were announced, then paused after backlash. More tariffs—this time reciprocal ones aimed at European imports—are set to begin in April. The back-and-forth makes it harder for businesses and households to plan ahead.

Inflation fears are also ramping up. The average 12-month inflation outlook rose to 6.2 percent in March, up from 5.8 percent in February. This is well above the 2.8 percent actual inflation rate measured by the Consumer Price Index over the past year. But what consumers believe prices will do often matters more than the official data. Higher grocery and utility costs are driving those expectations.

Weakening Job Outlook Adds to Gloom

Labor market concerns are compounding the pessimism. Fewer people expect jobs to be available in the coming months. The share of respondents who believe more jobs will open dropped to 16.7 percent, while those anticipating fewer jobs rose to 28.5 percent. In contrast, February’s readings stood at 18.8 percent and 26.6 percent, respectively.

This decline in labor optimism comes despite the U.S. economy adding 151,000 jobs in February and the unemployment rate holding at 4.1 percent. The disconnect between hard data and public sentiment reflects how deeply consumer attitudes have shifted.

Experts Warn Further Drops in Consumer Confidence Could Drag the Economy Down

Economists warn that this drop in consumer confidence could spill over into actual spending habits. Bill Adams, chief economist at Comerica Bank, said that when people feel financially insecure, they tend to delay major purchases and cut back on vacations and nonessential goods. That ripple effect can cause a slowdown in key sectors like housing, retail, and hospitality.

Surveys from the University of Michigan also confirm the trend. Their March report showed an 11 percent drop in consumer sentiment from February, spanning political affiliations and income levels. Small business confidence has also plummeted, according to a U.S. Chamber of Commerce survey released this week. In short, pessimism is spreading beyond consumers to CEOs and entrepreneurs.

The White House Response and the Fed’s Dilemma

Not everyone in government is alarmed. Stephen Miran, chair of President Trump’s Council of Economic Advisers, told CNBC that confidence data often reflects political bias. He suggested Americans may let their views of the administration color their perception of the economy.

Still, Federal Reserve officials are watching closely. Most have paused interest rate hikes while assessing the cumulative impact of tariffs and policy changes. They’ve adopted a cautious stance as inflation, sentiment, and trade uncertainties all move in troubling directions. While strong job numbers offer some reassurance, the risk of stagflation—a slowing economy paired with rising prices—looms larger than it did at the start of the year.

How is the recent drop in consumer confidence influencing your financial decisions? Tell us how you’re dealing with the current economy.

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