Inflation, tariffs and layoffs are taking a toll
of ConsumerAffairsAmid growing economic uncertainty, U.S. consumer confidence took a sharp hit in March, falling to its lowest level in over a year as Americans grew increasingly pessimistic about the economy, job prospects, and income growth.
According to the latest data from The Conference Board, the Consumer Confidence Index dropped 7.2 points to 92.9, marking the fourth consecutive month of decline and breaking out of the narrow range that had persisted since 2022.
The fall was driven primarily by deteriorating expectations about the future. The Expectations Index, which gauges consumers' short-term outlook for income, business, and labor market conditions, plunged to 65.2a 12-year low and well below the threshold of 80 that typically signals a looming recession. Meanwhile, the Present Situation Index, which reflects views on current economic and labor conditions, slipped to 134.5, down 3.6 points from February.
Fourth straight monthly decline
Consumer confidence declined for a fourth consecutive month in March, falling below the relatively narrow range that had prevailed since 2022, said Stephanie Guichard, senior economist for Global Indicators at The Conference Board, in a press release accompanying the release of the report. Consumers are growing more pessimistic about the future, particularly when it comes to business conditions and job prospects.
While consumers' assessment of current labor market conditions improved slightly 33.6% said jobs were plentiful, steady from February their view of business conditions dimmed. Only 17.7% described current business conditions as "good," down from 19.1% last month, while 16.6% labeled them bad, up from 14.8%.
Pessimism about the near-term future was widespread. Fewer consumers expected business conditions to improve in the next six months and more anticipated a worsening environment. Labor market expectations also soured, with 28.5% expecting fewer jobs aheadup nearly two percentage points from February.
Income expectations took a notable hit as well. The percentage of consumers anticipating a rise in income fell to 16.3% from 18.8% in February, while those expecting a decline rose to 15.5%, up from 12.8%.
Young consumers are more upbeat
The slide in confidence was most pronounced among Americans over the age of 55, with middle-aged consumers, 3555, also contributing to the downturn. Younger consumers under 35 were a rare bright spot, reporting slightly higher confidence driven by a better assessment of present conditions. Across income levels, the decline was widespread, sparing only households earning more than $125,000 annually.
Amid ongoing market volatility, consumer sentiment toward the stock market turned negative for the first time since late 2023. Only 37.4% of respondents expected stock prices to rise in the year aheada steep decline from 47.1% in February and down 20 percentage points from a peak in November 2024. In contrast, 44.5% anticipated a downturn in stock prices.
Inflation worries continue to weigh on consumers minds. Average 12-month inflation expectations rose to 6.2% in March from 5.8% in February, with concern mounting over rising prices for staples such as eggs and the impact of tariffs.
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Posted: 2025-03-25 14:23:09
