WASHINGTON (AP) — U.S. consumer confidence has fallen for the fourth consecutive month, as Americans' financial anxiety has plunged to a 12-year low amidst rising concerns over tariffs and inflation. The Conference Board reported on March 25, 2025, that its consumer confidence index dropped 7.2 points to 92.9, significantly lower than the expected decline to 94.5, according to a survey by FactSet.
This latest report highlights a stark decrease in Americans' short-term expectations for income, business, and the job market, with the index falling 9.6 points to 65.2. This level is the lowest documented in twelve years, and notably, a reading below 80 can indicate potential recessionary signals in the near future.
The Conference Board stated that the number of consumers anticipating a recession in the upcoming year has remained steady at a nine-month high, reflecting a widespread pessimism regarding economic conditions. “Consumers’ optimism about future income — which had held up quite strongly in the past few months — largely vanished,” said Stephanie Guichard, Senior Economist at The Conference Board, suggesting that worries about the economy and labor market have begun to affect consumers’ evaluations of their personal situations.
Analysts are concerned about the persistent inflationary pressures, which despite retreating slightly from the highs seen in the post-pandemic rebound, have not dipped below the Federal Reserve's target of 2%. These heightened prices, paired with President Trump's recent announcements of tariffs on numerous imported goods, have contributed to a general decline in consumer sentiment. The impact of these tariffs is particularly significant, sensitizing consumers to economic fluctuations, while retail sales in January faced a sharp drop primarily attributed to adverse weather conditions.
Earlier in March 2025, the government revealed that consumer spending had seen a modest uptick after a sharp pullback in February. However, the Conference Board's report indicates that consumers’ assessment of current conditions has also taken a hit, decreasing 3.6 points to 134.5. This consumer confidence index measures both Americans’ evaluation of the present economic landscape and their outlook for the forthcoming six months, underlining the crucial role consumer spending plays in U.S. economic activity.
The state of consumer confidence is not only vital for gauging economic trends but also serves as a significant indicator for economists assessing the health of the marketplace. Consumer spending constitutes approximately two-thirds of the U.S. economic activity, thus providing critical insight into consumer attitudes and future spending potential.
Confidence among consumers aged 55 and older has notably diminished, contributing heavily to the overall decline. Contrary to the older demographic, younger consumers, particularly those under 35, have shown slight confidence in their present financial situations, offsetting some of the overall gloom.
Looking deeper into the expectations regarding the stock market, only 37.4% of surveyed consumers expect stock prices to rise over the next year, marking a significant drop of nearly 10 percentage points from February and the first negative outlook since late 2023. In addition, expectations surrounding the labor market have also deteriorated, with only 16.7% of respondents envisioning an increase in job availability, down from 18.8% in February. Meanwhile, 28.5% now foresee fewer jobs, which is an increase from the previous month’s 26.6%.
The anxiety around economic conditions has led to the expectation of an increase in interest rates, with 54.6% predicting higher rates over the next year compared to 52.6% the prior month. Conversely, the percentage of those expecting lower rates has decreased to 22.4%, down from 24.1%. Through these observations, it’s evident that consumers feel less optimistic about their financial futures relative to earlier instances, as the average 12-month inflation expectations rose to 6.2% in March from February's 5.8%.
Demographically, views on current business conditions have weakened. Only 17.7% of consumers rated business conditions as “good,” a downturn from 19.1% in February, while 16.6% now consider conditions “bad,” up from 14.8%. Job perceptions remain relatively stable, with no change in the 33.6% of consumers deeming jobs as “plentiful,” while those who find jobs “hard to get” slightly decreased to 15.7% from 16.0%.
Looking ahead, consumer sentiments toward future business conditions are deeply pessimistic, with just 17.1% anticipating improvements, down from the previous 20.8%. Consumer confidence and expectations appear to align grimly across various income groups, verified by the substantial pessimism reflected in the index for those earning less than $125,000, while households earning above that threshold showed signs of improvement in confidence levels.
In summary, March’s consumer confidence report paints a troubling picture of financial outlooks for Americans, layering economic indicators that suggest reserved spending habits moving forward. With rising prices, trade policy concerns, and changes in consumer behavior, the future trajectory of consumer confidence will be critical to monitoring in the ensuing months as the U.S. economy navigates through these challenging times.
