Consumers aren’t liking what they see in the economy right now.
The Conference Board’s Consumer Confidence Index dropped by 7 points to 98.3 for February, below the Dow Jones consumer forecast of 102.3, according to CNBC, marking the largest monthly decline in consumer sentiment since August 2021.
“Views of current labor market conditions weakened. Consumers became pessimistic about future business conditions and less optimistic about future income,” Stephanie Guichard, the board’s senior economist for global indicators, said in a statement. “Pessimism about future employment prospects worsened and reached a ten-month high.”
Additionally, the Expectations Index — a metric based on consumers’ short-term expectations for the economy — dropped 9.3 points to 72.9, below the threshold of 80 that usually signals a recession. The uncertainty seemed to stem largely from the looming worry of a trade war and President Trump's newly imposed tariffs, along with bird flu affecting grocery prices.
“There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019,” Guichard noted. “Most notably, comments on the current Administration and its policies dominated the responses.”
The anticipation of higher prices from tariffs could influence spending in the short term, chief U.S. economist at financial services firm LPL Financial Jeffrey Roach suggested to CNBC. Consumers have a tendency to stockpile in the face of impending price hikes or scarcity, which may be shown as an uptick in economic activity.
“We should expect some short-term behavioral shifts within the consumer,” Roach said. “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.”
