Consumer sentiment declined in March as President Donald Trump’s tariffs triggered a market downturn and warnings of a potential recession, according to The Conference Board survey released on Tuesday. The decline was sharper than economists had anticipated.
Marking the fourth consecutive month of worsening consumer attitudes, the gauge dropped to its lowest level since 2021. While expectations of future income had remained steady even as overall sentiment declined in previous months, that measure fell significantly in March, The Conference Board reported.
Income concerns signal that “worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations,” said Stephanie Guichard, senior economist of global indicators at The Conference Board, in a statement.
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This data comes just a week before additional US tariffs are set to take effect, raising concerns about further escalation in the ongoing global trade war.
Trump has referred to April 2 as “liberation day,” emphasizing that a broad set of reciprocal tariffs would help rebalance US trade relationships. However, sources told ABC News on Monday that next week’s tariffs are expected to be more targeted than initially promised. The administration is focusing on trading partners with significant trade imbalances with the US, the sources said.
News of a potentially more restrained tariff plan lifted US stocks on Monday, helping to recover some of the losses seen earlier in the month. Major stock indexes saw modest gains in early trading on Tuesday.
Consumer sentiment appears to reflect the Federal Reserve’s cautious outlook. Last week, the Fed revised its year-end economic growth forecast downward while projecting higher inflation compared to its December estimate.
During a press conference in Washington, DC, last Wednesday, Fed Chair Jerome Powell attributed tariffs to “a good part” of recent inflation.
Despite these concerns, certain economic indicators remain strong. A recent jobs report showed steady hiring and a historically low unemployment rate. Inflation remains well below its 2022 peak, though it continues to exceed the Fed’s 2% target by nearly a percentage point.
Still, recession fears persist on Wall Street as businesses and consumers navigate the trade war. Earlier this month, Goldman Sachs raised its recession probability from 15% to 20%, while Moody’s Analytics estimated a 35% chance of a recession within the next year.
Consumer spending, which accounts for roughly two-thirds of US economic activity, could weaken if confidence continues to decline. “A cut-back in spending has the potential to reverberate throughout the economy,” said Bret Kenwell, US investment analyst at eToro, in a statement to ABC News.
(ABC News)
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