Consumer Confidence Slumps to 4-Year Low

Rising inflation and policy uncertainty over new tariffs also sent the future expectations index to a 12-year low.

People shop at a grocery store in New York City on March 12, 2025. Samira Bouaou/The Epoch Times

U.S. consumer confidence tumbled in March to its lowest level in more than four years, as households grew increasingly anxious about their financial futures and the broader economy.

The Conference Board reported on March 25 that its consumer confidence index fell by 7.2 points to 92.9—its weakest reading since the early months of the COVID-19 pandemic.

The more troubling signal came from the future expectations index, which plunged by nearly 10 points to 65.2. This marked the lowest level in 12 years and was well below the 80-point threshold historically associated with looming recessions.

“Consumer confidence declined for a fourth consecutive month in March, falling below the relatively narrow range that had prevailed since 2022,” Stephanie Guichard, senior economist at The Conference Board, said in a statement. “Consumers’ optimism about future income—which had held up quite strongly in the past few months—largely vanished.”

The decline in expectations was broad-based across age and income groups, though especially steep among Americans over 55 and households earning under $125,000.

Market sentiment also weakened. For the first time since 2023, more consumers expressed a negative outlook for stocks. Just 37.4 percent expected equity prices to rise over the next 12 months—down sharply from 57 percent in November 2024—while 44.5 percent anticipated declines.

Inflation expectations rose as well. The average 12-month inflation forecast ticked up to 6.2 percent, a 0.4 percentage point increase from February. Persistent price pressures on essentials such as groceries, coupled with uncertainty over the inflationary impact of new import tariffs, appear to be weighing on householders’ minds.

Despite these concerns, consumers’ view of current labor market conditions held steady. Roughly a third of respondents—33.6 percent—said jobs were “plentiful,” and fewer described jobs as “hard to get.” However, future job prospects dimmed, with only 16.7 percent expecting more jobs to be available in six months—down from 18.8 percent in February—while those expecting fewer jobs rose to 28.5 percent.

Income expectations also deteriorated. The share of consumers expecting higher incomes fell to 16.3 percent, while those bracing for income declines rose to 15.5 percent—nearly a three-point jump.

Confidence had surged in the wake of President Donald Trump’s reelection, buoyed by hopes for a pro-growth agenda focused on deregulation and tax relief. Recent declines in consumer confidence could reflect short-term uncertainty as the Trump administration implements a broader economic reset aimed at long-term growth and domestic resilience.

“Households were expecting President Trump to lead with tax cuts and deregulation, but instead we have austerity and the prospect of significant trade tariffs,” ING analysts noted in a recent report. “This is prompting anxiety about household finances and job prospects, with the concern being this translates into weaker spending.”

The administration has emphasized that these changes are part of a broader strategy aimed at strengthening America’s economy over the long term, with new tariffs intended to revitalize domestic manufacturing and reduce reliance on foreign supply chains. While these adjustments may introduce short-term volatility, officials maintain that they are necessary for restoring the competitiveness of the U.S. economy.

Treasury Secretary Scott Bessent has described the current transition as a “detox” period following years of heavy government spending, arguing that a return to private-sector-driven growth is essential for sustainable prosperity. Trump said earlier this month, “The hard way to do it is exactly what I’m doing, but the results are going to be 20 times greater.”

Still, potential government job cuts and entitlement reforms may be contributing to a more cautious consumer outlook.

“Government austerity and news headlines of government sector job losses and potential cuts to entitlements is prompting consumers to take a dimmer view of employment prospects and income expectations,” ING analysts wrote.

Despite the deterioration in future expectations, current economic activity remains mixed. The Conference Board’s present situation index edged down to 134.5 from 138.1—a relatively modest decline. Meanwhile, February retail sales rebounded after a weather-related slump in January.

Federal Reserve Chair Jerome Powell acknowledged the souring mood among consumers earlier this month, although he downplayed it.

“Sentiment readings have not been a good predictor of consumption growth in recent years,” Powell said in a March 7 speech in New York. “Many indicators show that the labor market is solid and broadly in balance.”

However, with consumer spending accounting for nearly two-thirds of U.S. economic output, the slide in sentiment poses a potential headwind for growth, especially if inflation remains elevated and uncertainty over trade and fiscal policy persists.