A growing number of consumers fear tariffs will produce a recession
of ConsumerAffairsApril 29, 2025
Key takeaways:
- Consumer confidence falls sharply: The Conference Board Consumer Confidence Index dropped by 7.9 points to 86.0 in April, reaching its lowest level since the early COVID-19 pandemic.
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Expectations signal recession fears: The Expectations Index plummeted 12.5 points to 54.4well below the recession warning thresholdwith pessimism growing about jobs, income, and business conditions.
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Tariffs and inflation top consumer worries: Tariff concerns surged to record levels, while inflation expectations hit 7%, reigniting anxiety about the economic outlook.
Consumer confidence took another sharp hit in April, declining for the fifth consecutive month and plunging to its lowest level since the onset of the COVID-19 pandemic, according to new data from The Conference Board. The Consumer Confidence Index fell 7.9 points to 86.0, highlighting growing unease about the future of the U.S. economy.
The decline was largely fueled by deteriorating consumer expectations. The Expectations Index, which measures short-term outlooks for income, business, and labor market conditions, dropped 12.5 points to 54.4its lowest reading since October 2011. Historically, a reading below 80 often signals a recession ahead.
“The decline was largely driven by consumers’ expectations,” Stephanie Guichard, senior economist for Global Indicators at The Conference Board, said in a statement. “Notably, expectations about future income prospects turned clearly negative for the first time in five years.”
Job concerns
Consumers are particularly pessimistic about the job market. The share of respondents anticipating fewer jobs in the next six months rose to 32.1%, nearly matching levels last seen during the Great Recession. Income prospects also darkened, with more consumers expecting their earnings to decrease rather than increase, a shift not seen since 2020.
Despite the negative outlook, consumers assessments of current business conditions slightly improved. Nearly 19.2% of those surveyed said business conditions were “good,” an uptick from March, while those viewing conditions as “bad” edged down. However, sentiment regarding the labor market weakened, with fewer consumers stating that jobs are “plentiful” and more reporting that jobs are “hard to get.”
The decline in confidence was broad-based across age, income, and political groups. The sharpest drop occurred among consumers aged 3555 and households earning over $125,000 annually, suggesting that even higher-income Americans are feeling the squeeze.
Financial market turbulence in April exacerbated worries. Almost half of consumers 48.5% expect stock prices to fall over the next year, the highest proportion since 2011. Inflation expectations also worsened, with anticipated 12-month inflation reaching 7%, marking the highest since the peak of the inflation surge in late 2022.
Tariffs emerge as a major concern
For the first time, tariffs overtook other issues as a dominant concern among consumers. Many respondents voiced anxiety about tariffs driving up prices and hurting economic growth. Inflation and high prices continue to weigh heavily on sentiment, even as some noted slight declines in gas and select food items.
Uncertainty about stock markets and the economy at large also featured prominently in consumer comments, reflecting a jittery mood heading into mid-2025.
Consumers’ spending intentions weakened substantially. Plans to buy homes, cars, and vacations declined on a six-month moving average basis. Meanwhile, intentions to spend on services, including dining out, also fell sharply, with the share of consumers planning to spend more on dining registering one of the largest month-on-month declines on record.
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