This month, consumer sentiment in the United States reportedly fell as concerns regarding the potential impact of President Trump’s tariffs, government layoffs, funding cutbacks, and immigration restrictions on the economy intensified.
The consumer sentiment index of the University of Michigan, which is closely monitored, experienced an additional 11% decline to 57.9 in mid-March from 64.7 the previous month.
This decline is a continuation of the downward trend that has been in place since Trump assumed office.
This was the lowest level since November 2022 and was significantly lower than the 63.2 that economists polled by The Wall Street Journal anticipated.
Consumer sentiment has decreased by 27% in comparison to the previous year.
Investors have been grappling with the administration’s inconsistent tariff policies for the past few weeks, resulting in a decline in stocks.
Wall Street is concerned that the trade uncertainty could result in a significant decline in the United States.
The Trump administration has contended that the economy may require a “detox” period and that declining stock values should not be a significant concern.
In an interview that aired on Sunday, Trump avoided a query regarding the possibility of a recession, which caused anxiety in the markets.
The market has responded promptly. S&P 500 entered correction territory on Thursday, which signifies that it was down at least 10% from its most recent high. It had achieved a record just last month.
Nevertheless, the markets met the report from Friday with aplomb. The three most significant U.S. stock indexes experienced an increase.
At least temporarily, the news that the government might avoid a closure appeared to outweigh concerns about the American consumer.
Although economists have been revising their projections for the economy, they continue to anticipate its expansion.
For instance, economist Mike Feroli of JPMorgan Chase stated on Friday that he now anticipates that the gross domestic product will expand at a mere 1% annual rate in both the first and second quarters before resuming its upward trajectory.
This was a decrease from his initial projections at the beginning of the year, which indicated that GDP would expand at a rate of 1.8% in the first quarter and 2% in the second.
Although decreases in consumer sentiment do not necessarily result in a decrease in consumer expenditure, they can serve as effective indicators.
The sentiment index’s expectations component experienced a 15% decline, which was particularly concerning.
Economists have discovered that the Michigan expectations index, which is derived from consumers’ expectations regarding the economy’s trajectory over the next year, can assist in the forecasting of future expenditures.
One potential consequence is that consumer-facing businesses may experience a decline in demand, which could further burden the economy and negatively impact the employment market.
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