Consumer confidence slumps to lowest level since the US rolled out tariffs in April

Consumer Confidence Slumps as Americans Worry About Inflation and Tariffs

Consumer confidence in the U.S. economy continued its downward trajectory in December, marking the fifth consecutive monthly decline as Americans express growing concern over persistent inflation and the economic impact of President Donald Trump’s tariff policies.

The Conference Board reported Tuesday that its consumer confidence index dropped 3.8 points to 89.1 in December, approaching the low point of 85.7 recorded in April when Trump first implemented his widespread import taxes on trading partners. November’s reading was revised upward to 92.9.

The survey revealed that Americans’ assessment of their current economic situation deteriorated significantly, tumbling 9.5 points to 116.8. Meanwhile, the measurement of short-term expectations for income, business conditions, and employment remained steady at 70.7, though this figure has now spent 11 consecutive months below the critical threshold of 80—a marker that economists typically associate with recession risk.

“The write-in responses clearly show that inflation and high prices remain consumers’ primary concern, alongside the impact of tariffs,” said a Conference Board spokesperson. “These concerns persist despite President Trump’s repeated assertions that inflation is a hoax.”

The labor market, once a bright spot in the economy, is showing signs of weakness in consumer perception. The percentage of consumers describing jobs as “plentiful” decreased to 26.7%, down from 28.2% in November. Conversely, those reporting jobs as “hard to get” increased to 20.8% from 20.1% the previous month.

These perceptions align with recent government data showing the U.S. economy gained 64,000 jobs in November but lost 105,000 in October. The unemployment rate has risen to 4.6%, reaching its highest level since 2021.

Economists describe the current labor market as stuck in a “low hire, low fire” pattern, with businesses reluctant to make significant employment changes due to uncertainty surrounding Trump’s tariff policies and the lingering effects of elevated interest rates. Job creation since March has averaged just 35,000 positions monthly, compared to 71,000 in the year ending March. Federal Reserve Chair Jerome Powell has indicated these figures may be revised even lower.

“Companies are essentially in a holding pattern,” explained Dr. Maria Chen, an economist at Capital Economics. “The combination of trade uncertainty and higher borrowing costs has made businesses extremely cautious about expansion or contraction, leaving the job market in limbo.”

Despite the general pessimism, the survey did reveal some counterintuitive findings. The proportion of respondents who consider a recession unlikely in the next year actually increased. Additionally, while respondents’ views of their current financial situation turned negative for the first time in nearly four years, their expectations about future financial circumstances were the most positive since January.

In other economic news released Tuesday, the government reported that the economy expanded at a robust 4.3% annual rate in the third quarter. However, economists anticipate a significant slowdown in the fourth quarter, citing the recent government shutdown and potential pullbacks in consumer spending.

“The third-quarter GDP number is essentially looking in the rearview mirror,” noted James Wilson, chief economist at Meridian Research. “The confidence data is more forward-looking and suggests consumers are becoming increasingly cautious about their spending, which could substantially impact economic growth in the months ahead.”

The tariff policies implemented by the Trump administration continue to be a focal point of economic concern, as their effects ripple through global supply chains and impact consumer prices across various sectors. While designed to protect American industries, these trade measures have created complex economic consequences that appear to be weighing heavily on consumer sentiment.