Shopper confidence plunges most in almost 4 years as inflation fears escalate on Trump tariff threats

Shopper confidence declined sharply in February, notching its greatest month-to-month decline in almost 4 years as as uncertainty associated to Trump’s commerce coverage additionally lifted inflation expectations, in keeping with new information launched Tuesday morning.

The Convention Board’s Shopper Confidence Index for February got here in at a studying of 98.3, a big drop from January’s revised 105 studying and in need of the 102.5 studying anticipated by economists.

“In February, shopper confidence registered the biggest month-to-month decline since August 2021,” Stephanie Guichard, senior economist at The Convention Board, stated in a press launch. “That is the third consecutive month-on-month decline, bringing the Index to the underside of the vary that has prevailed since 2022.”

The “Current Scenario Index,” which measures customers’ evaluation of present enterprise and labor market circumstances, fell to 136.5 in February from 139 in January.

The “Expectations Index,” which tracks customers’ short-term outlook for revenue, enterprise, and labor market circumstances, additionally fell to 72.9 in February from 82 final month. Traditionally, a studying beneath 80 in that class indicators a recession within the coming 12 months. This was the primary time since June 2024 that the index got here in beneath that threshold.

In the meantime, common 12-month inflation expectations jumped from 5.2% final month to six% in February, echoing different current information factors that spotlight larger considerations round tariff uncertainty and the affect these insurance policies might have on inflation.

“This improve doubtless mirrored a mixture of elements, together with sticky inflation but additionally the current soar in costs of key family staples like eggs and the anticipated affect of tariffs,” Guichard stated. “There was a pointy improve within the mentions of commerce and tariffs, again to a stage unseen since 2019. Most notably, feedback on the present Administration and its insurance policies dominated the responses.”

President Donald Trump’s revived tariff threats have weighed on sentiment because the administration doubles down on 25% across-the-board tariffs on Canada and Mexico, that are set to return subsequent month. 10% duties on China have already been applied.

Earlier in February, Trump introduced international 25% tariffs on metal and aluminum imports which can be anticipated to take impact on March 12. Trump later ordered that federal businesses examine reciprocal tariffs on buying and selling companions.

Extra just lately, Trump stated to anticipate further duties on autos, chips, and prescribed drugs. A flat tariff “within the neighborhood of 25%” would apply to all overseas automakers and begin as quickly as April 2.

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