U.S. consumer expectations hit 12-year low as economic worries mount

According to a monthly analysis conducted by the Conference Board, consumer expectations for future income, business, and labour market conditions dropped to their lowest level in 12 years, reaching an index of 65.2.

This comes as Americans continue to view the U.S. economy negatively due to rising prices and uncertainty surrounding President Donald Trump’s policies.

The economic outlook’s uncertainty is seriously affecting consumers’ predictions of their future well-being

By March, the Conference Board consumer confidence index had reached 92.9, the lowest level in four years and down from February’s 98.3.

The expectations index, which examines consumers’ short-term expectations for business, labour market, and income conditions, also declined in February and March.

At 65.2% in March, the expectations index was far below the 80-point mark, which, according to the Conference Board, normally indicates an impending recession. February also saw a decline, with the index falling to 72.9—the first time it had dipped below 80 since June 2024.

Yelena Shulyatyeva, senior U.S. economist at the Conference Board, said one of their most striking findings was how consumers’ expectations concerning their financial circumstances had deteriorated.

“So that does seem to indicate that all this uncertainty surrounding the economic outlook is really beginning to weigh on consumers’ (view) of how they will do going forward,” she added.

In addition, consumer expectations for the economy have weakened, according to multiple readings, including Tuesday’s. The market is increasingly concerned that consumers could pull back on spending if they grow more pessimistic about the economy.

The chair of the Federal Reserve, Jerome Powell, and economists disagree on whether “soft” survey data, such as the consumer confidence index, will make “hard” economic data, like real consumer spending, worse.

“There’ve been lots of times when people are saying downbeat stuff about the economy, and they go out and buy a new car,” Powell said. However, we can’t assume that that will be the case here. We will be watching closely for weakness in the real data.”

For now, however, most economists have insisted that there remains no clear sign of a sharp slowdown, even if the overall growth trajectory for the U.S. economy is likely weaker than expected going into the year.

On Sunday, Morgan Stanley’s chief global economist wrote in a research note to clients that all recession-related crises are probably overstated. He pointed to the worrying collapse of retail sales in January before rebounding in February.

U.S. consumers express low confidence through growing financial pessimism 

According to the February edition of the Federal Reserve Bank of New York’s Survey of Consumer Expectations, which was made public on Monday, March 10, consumers were less confident about their future financial circumstances even though their medium- and long-term inflation expectations remained constant.

Furthermore, the bank’s Centre for Macroeconomic Data revealed notable drops in expectations regarding credit accessibility, delinquency, and unemployment.

Based on credit accessibility, a greater percentage of households believed it was harder to obtain credit, whereas a smaller percentage believed it was simpler.

Additionally, three banking regulators, the Office of the Comptroller of the Currency, the Federal Reserve Board, and the Federal Deposit Insurance Corp. released data on Monday that indicated weakening credit quality among borrowers with balances exceeding $100 million.

The regulators explained that the reasons for the negative trends in credit quality were the pressure of high interest rates on leveraged borrowers and the compressed operating margins in certain industry sectors.

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