Trade policy uncertainty and inflation concerns pushed consumer confidence to its lowest level in nearly a year.
A new survey from The Conference Board shows that consumer confidence fell and inflation expectations rose in February—as optimism waned amid uncertainty over the Trump administration’s trade policies—accompanied by strong views of current business conditions.
The group’s consumer confidence
index fell by 7 points, to 98.3 in February, marking the sharpest single-month decline in more than years and the lowest level in nearly a year. This drop was primarily driven by a 9.3-point decline in the forward-looking expectations index, to 72.9, dipping below the 80-point recession warning threshold.
“A mixed bag here,” Jeffrey Roach, chief economist at LPL Financial, told The Epoch Times in an emailed statement. “Consumers’ views on the current situation are rosy, remaining above 130, although still below pre-pandemic levels.”
The future outlook was less rosy, with the drop in the expectations index representing the third consecutive month of declines.
“We should expect some short-term behavioral shifts within the consumer,” Roach said, adding that “consumers are increasingly nervous about the unknown impacts from potential tariffs and could pull forward consumer demand as they anticipate higher prices for imports in the near future.”
Inflation expectations for the next year jumped from 5.2 percent to 6.0 percent, according to The Conference Board, reflecting concerns about persistent price pressures. This aligns with the latest Consumer Price Index (CPI)
data, which showed inflation creeping up from 2.9 percent in December to 3.0 percent in January, indicating that price stability remains elusive.
President Donald Trump acknowledged the recent inflation uptick, and attributed it to what he called reckless spending under the Biden administration. “They spent money like nobody has ever spent,” Trump told Fox News in a Feb. 18
interview, saying the previous administration was “given $9 trillion to throw out the window.”
While speaking separately on Fox News “The Brian Kilmeade Show,” Trump
suggested that stubborn inflation was an inherited issue that could take up to 12 months to resolve as his policies take effect. His strategy to combat inflation, as
outlined in December, combines boosting domestic fossil fuel production to lower energy costs, fixing remaining supply-chain bottlenecks to boost efficiency, and encouraging domestic production and the re-shoring of supply chains through incentives and tariffs.
Trump’s trade agenda is centered on
reciprocal tariffs, designed to match the trade barriers imposed by other nations. Part of his aim is to reduce America’s trade deficit with the rest of the world, which last year hit a record-high $918 billion.
While some analysts warn of inflationary risks, the full impact of Trump’s tariff policies remains unclear. His expanded steel and aluminum tariffs are set to take effect in mid-March, while the 25 percent tariffs on imports from Canada and Mexico have been postponed until early March. The broader reciprocal tariff policy is scheduled for April, leading to heightened uncertainty in the near term until those policies take effect and their impact becomes clear.
Stephanie Guichard, senior economist at The Conference Board, said that policy-related concerns were widespread in the write-in responses to the confidence survey.
“There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019,” Guichard said in a statement. “Most notably, comments on the current Administration and its policies dominated the responses.”
Guichard also noted that, of the five components that make up the consumer confidence index, only consumers’ assessment of current business conditions improved in the latest survey.
“Views of current labor market conditions weakened. Consumers became pessimistic about future business conditions and less optimistic about future income. Pessimism about future employment prospects worsened and reached a ten-month high,” she said.
Beyond consumer sentiment, business confidence has also faltered. Recent data from S&P Global data
showed a sharp decline in business activity in February, with companies citing federal policies, tariffs, and rising input costs as key concerns.
“The upbeat mood seen among U.S. businesses at the start of the year has evaporated, replaced with a darkening picture of heightened uncertainty, stalling business activity and rising prices,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement.
A recent manufacturing
survey from the Federal Reserve Bank of Dallas showed Texas factory activity stalling in February, while perceptions of business conditions deteriorated.
Uncertainty about policy impacts—in particular tariffs—dominated the write-in responses.
“It is very hard to plan. Interest rates? Tariffs? Wow,”
wrote an executive from the nonmetallic mineral product industry, while a food manufacturing executive wrote: “The back-and-forth tariff talk has been very stressful, but it has not been disruptive so far.”
Andrew Moran contributed to this report.
