Consumer confidence in the United States has fallen sharply, reaching its lowest level since January 2021, according to the latest survey from The Conference Board.
The confidence index declined by 7.2 points in March, landing at 92.9, marking the fourth consecutive monthly decline. The drop extends a trend that began in December following the US presidential election.
The decline in sentiment appears to be driven by growing concerns about inflation, economic uncertainty, and the potential for a recession. The Conference Board’s survey revealed that Americans expect inflation to rise further this year, and a growing number predict that the economy could enter a recession in the coming months. This combination of slowing growth and rising prices resembles a period of economic stagnation known as “stagflation,” a concern echoed by officials at the Federal Reserve.
Much of the uncertainty stems from ongoing trade policies and tariff disputes. President Donald Trump’s economic agenda, particularly his approach to international trade, has led to fluctuations in financial markets and business sentiment. Earlier this month, the administration imposed 25% tariffs on imports from Mexico and Canada but later delayed them for a month following pushback from business leaders. Additionally, the European Union responded to Trump’s metal tariffs with retaliatory measures, prompting the president to consider imposing a 200% tariff on European alcohol.
The unpredictability of these trade policies has created challenges for businesses, investors, and consumers, making long-term planning difficult. Surveys indicate that this uncertainty has contributed to the decline in consumer sentiment and increased concerns about future economic stability.
A key component of the consumer confidence index—the expectations index, which measures views on income, business conditions, and the labor market—fell sharply in March, dropping 9.6 points to 65.2. This is the lowest level in 12 years and well below the threshold typically associated with a potential recession.
“Consumers’ optimism about future income— which had remained relatively stable in recent months—has largely faded, suggesting that concerns about the economy and labor market are now affecting personal financial outlooks,” said Stephanie Guichard, senior economist at The Conference Board.
Despite these concerns, the US labor market remains relatively strong. The economy added 151,000 jobs last month, and the unemployment rate remains low at 4.1%. However, economists warn that a prolonged decline in consumer sentiment could eventually impact spending, which is a major driver of economic activity.
The Federal Reserve is closely monitoring the economic impact of recent policy changes, including tariffs, regulatory shifts, and immigration policies. Central bank officials have indicated they will take a cautious approach to interest rates, holding them steady while assessing economic conditions.
Fed Chair Jerome Powell acknowledged inflation concerns but noted that long-term expectations remain stable. Some policymakers suggest that the economy does not currently require additional stimulus in the form of interest rate cuts, but they are prepared to adjust policy if economic conditions worsen.
