In April, consumer confidence in the United States reached its lowest point in nearly five years, influenced by concerns about tariffs and trade uncertainties affecting the economic outlook. The Conference Board reported that its consumer confidence index decreased by 7.9 points to 86, marking the lowest level since May 2020. This decline fell short of economists’ expectations, who had predicted a slip to 87.5.
The Expectations Index, reflecting consumers’ short-term perspectives on income, business, and labor market conditions, dropped 12.5 points to 54.4, which is the lowest since October 2011 and significantly below the recession threshold of 80. Additionally, the Present Situation Index, which assesses current business and labor market conditions, decreased by 0.9 points to 133.5.
Stephanie Guichard, a senior economist at The Conference Board, noted that consumer confidence declined for a fifth consecutive month in April, reaching levels not seen since the onset of the COVID-19 pandemic. The decline was largely attributed to deteriorating consumer expectations regarding business conditions, employment prospects, and future income, signaling widespread pessimism about the future. Notably, the percentage of consumers anticipating fewer jobs in the next six months climbed to 32.1%, a level comparable to that during the Great Recession in April 2009.
Guichard also highlighted that the average 12-month inflation expectations rose to 7% in April, the highest since November 2022. Consumers’ assessments of their expected financial situations reached their lowest point since the question was first introduced in 2022.
The perceived likelihood of a U.S. recession within the next 12 months increased to 72% in April, up from about 65% in December and January. This consumer confidence report precedes the government’s economic growth report, which is anticipated to reveal a significant slowdown in the first quarter’s growth, influenced by businesses increasing imports due to tariff-related cost increases.
GDP is expected to have risen at an annualized rate of 0.3% in the first quarter, from January to March, marking the weakest growth since the second quarter of 2022, according to a Reuters survey. Risks appear to be tilted to the downside, with the Atlanta Federal Reserve forecasting a GDP contraction at a 0.4% rate after adjusting for imports and exports of gold. The economy previously grew at a 2.4% pace in the fourth quarter.
Reuters contributed to this report.
