Consumer Confidence Drops 7.2 Points to 92.9 in March

Consumer confidence in the United States has experienced a sharp decline for the fourth consecutive month, hitting its lowest level in over a decade. This downturn is primarily due to increasing pessimism regarding future business conditions and personal income prospects. The Conference Board's Consumer Confidence Index decreased by 7.2 points to 92.9 in March, the lowest reading since 2021 and below economists' expectations.

The Expectations Index, which measures consumers' short-term outlook for income, business conditions, and the labor market, saw a nearly 10-point drop. This index now stands at 65.2, the lowest in 12 years and significantly below the 80-point threshold that typically indicates an impending recession. Nearly two-thirds of respondents believe that a recession is at least "somewhat likely" within the next 12 months.

The decline in consumer confidence is influenced by several factors, including concerns over inflation and the impact of tariffs. Consumers anticipate that inflation will rise to 6.2% over the next year, up from the previous month. Additionally, there is a growing sense of economic and policy uncertainty, with many consumers expressing worries about the potential effects of trade policies and tariffs on their financial well-being.

The survey also indicated that consumers are more pessimistic about their future income and the health of the labor market. For the first time since 2023, consumers have turned negative on the stock market, with only 37.4% expecting stock prices to rise over the next year. This shift in sentiment is particularly pronounced among older and higher-income individuals, who have seen the largest declines in confidence.

The recent stock market downturn is likely contributing to the overall decline in consumer confidence. However, economists are closely monitoring these trends, as consumer confidence surveys can have a significant impact on consumer spending, which accounts for about two-thirds of the U.S. economy. The ongoing uncertainty around tariffs and economic policies is further exacerbating consumer concerns, making it crucial for policymakers to address these issues to restore confidence and stability.