Inflation, tariff worries drive consumers' outlooks to lowest levels in 12 years

Amid concerns about already high prices that might be driven higher by tariffs, consumer confidence about the economy's future fell in March to its lowest level in 12 years, according to data released Tuesday by The Conference Board.

The last time Americans' expectations about the economy were this low (65.2) the U.S. was slowly emerging from the Great Recession and the aftershocks of the subprime crisis. Conversely, Americans' current view of the economy remains historically high at 134.5 but has fallen 10 points since its peak December.

The overall Consumer Confidence Index fell for the fourth consecutive month by 7.2 points to 92.9 – its lowest level since January 2021.

Tuesday's report comes on the heals of the University of Michigan's report earlier this month that consumer sentiment had fallen 22% since December to a 29-month low.

U.S. consumers outlook 'especially gloomy'

"Consumers’ expectations were especially gloomy, with pessimism about future business conditions deepening and confidence about future employment prospects falling to a 12-year low," Stephanie Guichard, senior economist at The Conference Board, wrote in the report.

Consumers said they expect inflation to rise 6.2% in the next 12 months (up from 5.8% in February), while they "remained concerned about high prices for key household staples like eggs and the impact of tariffs," Guichard wrote.

The Conference Board attributed the overall decline in consumer confidence to responses from Americans older than 55 as well as some between 35- and 55-years old. Consumers under 35 voiced a slight increase in confidence, which helped offset older Americans' views.

Consumers 'spooked' by tariffs, DOGE cuts and falling stock market

"Consumers are spooked by headlines about higher tariffs and trade war, DOGE cuts, and the stock market selloff," Bill Adams, chief economist at Comerica Bank, wrote in his remarks Tuesday morning.

"If the public conversation turns from spending cuts to tax cut happy talk, consumer sentiment could rebound," Adams wrote. "But in the meantime, the economy is likely to slow and underperform its growth in 2023 and 2024."

Consumers concerns declined from February in several aspects of their six-month outlooks, the Conference Board reported:

◾ Business conditions will ... Improve 17.1% (down from 20.5%), Worsen 27.3% (up from 25.5%)

◾ Number of jobs available will ... Increase 16.7% (down from 18.8%), Decrease 28.5% (up from 26.6%)

◾ Incomes will ... Rise 16.3% (down from 18.8%), Fall 15.5% (up from 12.8%)