A survey report released by the U.S. Economic Council on Tuesday (25th) showed that consumer confidence fell again in March to the lowest level since early 2021 due to concerns about rising prices and the Trump administration's intensifying tariff policies. Specifically, the consumer confidence index fell to 92.9 in March, lower than economists' expectations of 94.2. The previous value was revised up to 100.1 from 98.3.
To add insult to injury, an index of expectations measuring the state of the U.S. economy over the next six months fell sharply, by nearly 10 points, to 65.2, the lowest level in 12 years. In contrast, assessments of current economic conditions were more modest, with smaller declines. This shows that as the Trump administration strengthens tariff measures, household confidence in the future economy is suffering a heavy blow.
Confidence in future business conditions has fallen significantly, particularly confidence in future employment prospects, which has reached a 12-year low, the report noted. The recent optimism among consumers about future income has also basically disappeared, showing that the American people's concerns about the overall economy and labor market have expanded to their assessment of personal economic conditions.
Meanwhile, consumers' expectations for inflation over the next 12 months rose to a two-year high of 6.2%, accelerating from 5.8% in February. This increase mainly reflects people's concerns about the rising prices of basic necessities, especially the high prices of daily commodities such as eggs, which further aggravates consumer anxiety.
As consumers become increasingly concerned about future inflation and economic prospects, expectations for interest rate hikes have also risen. The U.S. Federal Reserve (Fed) has kept its benchmark interest rate unchanged for two meetings and said it would monitor the impact of Trump's policies. The report pointed out that expectations for future interest rate hikes have also reached the highest level in the past year, and consumers' concerns about future credit conditions have increased accordingly.
In addition, consumer purchasing conditions for bulk goods have improved slightly, perhaps because consumers plan to purchase bulk goods such as appliances and electronics in advance before tariffs take effect. However, while some consumers are prepared to spend ahead of tariffs, a decline in consumer confidence could translate into reduced spending in the future, posing potential pressure on U.S. economic growth.
According to the report, the main force for the decline in the confidence index comes from consumers over the age of 55. The confidence of this group has dropped sharply, and their expectations for the future are especially more pessimistic. Confidence also declined among consumers aged 35 to 55. In contrast, consumer confidence among those under 35 years old recovered slightly, with their assessment of current conditions rising, partially offsetting a pessimistic view of the future.
In addition, high-income households (annual income of more than $125,000) have more stable confidence in the future, while confidence among low-income groups has generally declined, showing that different income groups have different levels of worry about the future economy.
Overall, while the U.S. unemployment rate remains low and manufacturing activity picked up in February, consumers have become increasingly pessimistic about the future of the economy, reflecting that the Trump administration's trade policies, especially tariffs, are having a profound impact on consumer confidence and economic activity.
