US President Donald Trump is set to announce sweeping tariffs in a few days, sending consumer sentiment into a tailspin. A survey by the University of Michigan found that consumer confidence dropped 12% this month, its lowest reading since 2009.
Respondents cited Trump’s trade war as the main reason for their concerns. Two-thirds expect unemployment to rise next year, making it the highest expectation since 2009. The “expectations” index, which captures respondents’ outlook on the economy, plummeted 18% and has lost over 30% since November.
Inflation expectations soared to 5%, its highest level since November 2022. Experts warn that if these expectations continue to rise, it could complicate the Fed’s plans. The Fed would need to re-evaluate its approach if consumers’ predictions of rising unemployment come true.
The ongoing trade war and inflation concerns have Americans on edge. Consumer spending accounts for about 70% of economic output, so a decline in this area could signal trouble for the broader economy. Experts warn that further rate cuts may be off the table if expectations continue to trend in the wrong direction.
Source: https://edition.cnn.com/2025/03/28/economy/us-consumer-sentiment-march/index.html