Consumer Confidence Plunges as Recession Signs Multiply
U.S. consumer confidence suffered a sharp blow yesterday, plummeting 7.2 points to 92.9, according to the latest data from the Conference Board Consumer Confidence Index. Alarmingly, the Expectations Index, which measures consumers’ short-term outlook on the economy, tumbled to 65.2—its lowest level in 12 years—breaking well below the critical 80-point threshold that traditionally signals an imminent recession. This decline reflects mounting concerns among Americans over inflation, declining stock market optimism, and uncertainties surrounding the Federal Reserve’s monetary policies.
Confirming the deepening economic apprehension, the Present Situation Index, which gauges consumers’ assessments of current business and labor market conditions, also fell by 3.6 points to 134.5. Troubling trends appeared in consumers’ views of financial markets as well: Only 37.4% now expect stock prices to rise over the upcoming year, a nearly 10-point plunge from the previous month’s figure. Meanwhile, bearish sentiment surged, with 44.5% of respondents anticipating declining stock prices, marking an 11-percentage-point increase since February.
Persistent inflation remains a key source of public anxiety. Average 12-month inflation expectations rose notably from 5.8% in February to 6.2% in March, signaling diminishing confidence in the Federal Reserve’s ability to stabilize prices. This jump in inflation expectations comes shortly after the Fed’s recent decision last week to hold interest rates steady. Notably, the central bank partially attributed ongoing price pressures to former President Trump’s trade policy—a claim critics argue seeks to shift blame for inflationary consequences largely driven by years of loose monetary policy.
Adding to concerns, the share of consumers predicting higher interest rates in the coming year climbed to 54.6%, further dampening spending plans. Economic uncertainties also led to a decline in six-month average purchasing intentions for homes and automobiles, reflecting increased wariness over large and leverage-dependent spending. However, intentions to purchase other big-ticket items showed slight improvement, perhaps indicative of growing unease about future price increases. Intensifying the gloomy economic outlook, the proportion of consumers anticipating a recession within the next year held steady at a nine-month high.
Additional warning signs flashed yesterday when the PMI Flash US Manufacturing Output Index fell to a three-month low of 48.8—a reading that adds credence to recession concerns. Market participants will closely monitor the release of the Federal Reserve’s preferred inflation indicator, the Personal Consumption Expenditure (PCE) index, slated for Friday, March 28, to gauge how entrenched inflation pressures have become.
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