US consumer sentiment tumbles to 4-year low; fears over tariffs mount

WASHINGTON — U.S. consumer confidence plunged to the lowest level in more than four years in March, with households fearing a recession in the future and higher inflation because of tariffs.

The Conference Board said on Tuesday that write-in responses to the survey showed "worries about the impact of trade policies and tariffs in particular are on the rise," adding "there were also more references than usual to economic and policy uncertainty." The survey's measure of future expectations hit a 12-year low and breached a level associated with an economic downturn.

President Donald Trump's on- and-off again tariffs have been panned by economists for sowing confusion and uncertainty that they said was making it challenging for business to plan ahead, to the detriment of the economy. Trump on Monday indicated that not all of his threatened duties would be imposed on April 2 and some countries may get breaks, but at the same time said tariffs on imported automobiles were coming soon.

"Consumers are rattled," said Carl Weinberg, chief economist at High Frequency Economics. "At great personal risk, we will opine that the chaos in Washington has something to do with this. The decline in consumer sentiment since the November election can no longer be written off as a coincidence."

The Conference Board said its consumer confidence index plunged 7.2 points to 92.9 this month, the lowest level since January 2021. Economists polled by Reuters had forecast the index sliding to 94.0.

The fourth straight monthly decline in confidence mirrored a similar deterioration in the University of Michigan's consumer sentiment measure, which has also erased all the gains notched in the aftermath of Trump's election victory in November.

The drop in confidence this month was driven by consumers over 55 years old. Morale among those in the 35-55 year age group also worsened. But confidence rose slightly among consumers under 35 years. Confidence slumped across income groups, with the exception of households earning more than $125,000 a year. Consumers had over the past few months been generally upbeat about future income.

"Consumers' optimism about future income ... largely vanished, suggesting worries about the economy and labor market have started to spread into consumers' assessments of their personal situations," said Stephanie Guichard, senior economist, Global Indicators at the Conference Board.

Rising recession worries

The survey's expectations index, based on consumers' short-term outlook for income, business, and labor market conditions, dropped 9.6 points to 65.2 — the lowest level in 12 years and well below the threshold of 80 that usually signals a recession ahead. The proportion of consumers anticipating a recession over the next 12 months held steady at a nine-month high.

Despite the gloom, consumers showed little sign they planned to dramatically curtail spending. There was a slight decline in the share of consumers planning to buy motor vehicles over the next six months. Many intended to purchase television sets and household appliances like refrigerators, microwaves and washing machines. The Conference Board said the increase in plans was likely preemptive buying before tariffs lead to price increases.

Still, that could probably support consumer spending and keep the economic expansion on track for now. Many consumers planned to go on vacation over the next six months.

Consumers' average 12-month inflation expectations jumped to 6.2%, the highest since April 2023, from 5.8% last month.

U.S. stocks were lower. The dollar eased against a basket of currencies. U.S. Treasury yields rose.

The survey's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, climbed to 17.9 from 17.6 in February.

This measure correlates to the unemployment rate in the Labor Department's monthly employment report.

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