Consumer confidence hits lowest level since 2021 amid economic uncertainty

The economic mood in the United States continues to darken as consumer confidence plummets to its lowest level since January 2021. According to the latest survey by the Conference Board, consumer confidence fell 7.2 points this month to a reading of 92.9, extending a decline that began in December after the U.S. presidential election. The downward trend highlights growing pessimism among American consumers regarding inflation, economic stability, and potential recession risks.

A key takeaway from the survey is that Americans increasingly expect higher inflation in the coming year. Many also anticipate an economic downturn, with the percentage of respondents predicting a recession in the next 12 months remaining at a nine-month high. This combination of weakening growth and persistent inflation raises concerns about potential stagflation—an economic condition characterized by stagnant growth and rising prices.

The survey further revealed that expectations regarding income, business conditions, and labor market stability fell sharply in March. The index measuring these sentiments dropped 9.6 points to 65.2, marking its lowest level in 12 years. Such pessimism could lead to reduced consumer spending, a significant driver of U.S. economic growth.

Adding to consumer anxiety is President Donald Trump’s aggressive economic agenda. His administration’s approach to trade, including recent tariffs and retaliatory measures, has created uncertainty for businesses and investors. Earlier this month, the administration imposed a 25% tariff on goods from Mexico and Canada, only to delay its enforcement following backlash from business leaders. Similarly, Trump’s ongoing trade disputes with the European Union have escalated, with threats of a 200% tariff on European alcohol.

The unpredictability of these policies has left businesses and investors scrambling to adapt, further fueling concerns about economic stability. Many worry that such uncertainty could dampen economic growth and contribute to stagflation fears.

The Federal Reserve faces increasing pressure to navigate these turbulent economic conditions. While the Fed has maintained steady interest rates, policymakers are closely monitoring how Trump’s policies impact inflation, employment, and overall economic growth.

Fed Governor Adriana Kugler emphasized a cautious approach, stating that the central bank is prepared to hold rates steady while assessing the economy’s response to ongoing policy changes. Fed Chair Jerome Powell has also stressed the importance of evaluating the “net effect” of these policies before making any significant adjustments to monetary policy.

Despite growing economic concerns, the U.S. labor market remains a bright spot. February’s jobs report showed employers adding 151,000 jobs, with the unemployment rate holding at a relatively low 4.1%. However, whether this strength can offset broader economic instability remains uncertain.

As the U.S. economy grapples with inflation, trade disputes, and shifting monetary policies, consumer sentiment will be a crucial factor in determining future economic performance. While the labor market remains strong, continued uncertainty may weigh on consumer spending and business investments.

The coming months will be critical in shaping the nation’s economic trajectory. Policymakers, businesses, and consumers alike will need to navigate an increasingly complex financial landscape as they assess the true impact of ongoing economic policies.