Aftermath Of Trump Tariffs: US Economy Suffers As Consumer Sentiment Falls For Third Consecutive Month

Consumer confidence in the United States continued its downward trajectory for the third consecutive month in March, as ongoing tariff disputes and economic uncertainty dampened sentiment. The University of Michigan’s latest survey reported a 10.5 per cent drop in consumer sentiment, bringing the index to 57.9. This represented a sharp 27.1 per cent decline compared to the same month last year.

The survey revealed that the slump in sentiment prevaled across various demographics, including age, education, income levels, wealth, political leanings, and geographic locations, reported IANS. While perceptions of the current economic landscape remained relatively stable, expectations for the future deteriorated significantly.

This pessimism was driven by concerns emerging over several economic factors such as employment opportunities, inflation, personal finances, and business conditions. Multiple consumers said the confidence continued to decline due to an uncertainty in policy decisions. Not only did this volatility hamper present conditions, it also made future planning a difficult task. 

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Inflation Expectations Reach New Highs

Inflation expectations surged, with the year-ahead forecast rising from 4.3 per cent in February to 4.9 per cent in March—the highest level recorded since November 2022. This marked the third consecutive month where inflation expectations increased by at least 0.5 percentage points. Long-term inflation concerns also grew, with projections rising from 3.5 per cent in February to 3.9 per cent in March, making it the steepest month-over-month rise in inflation expectations since 1993.

“Many consumers pointed to the significant uncertainty surrounding policies and other economic factors,” said Joanne Hsu, director of the survey. She emphasised that unpredictable shifts in economic policies made financial planning increasingly difficult, regardless of political alignment. The survey also noted that Americans across the political spectrum acknowledged a worsening economic outlook since February.

Notably, the trade environment has remained tense after President Donald Trump went ahead and enforced tariffs on a wide range of imports from key trading partners, including China, Canada, and the European Union. In response, these countries implemented retaliatory duties. Some of these tariffs were initially introduced and later suspended for a brief period. On March 13, Trump warned of a potential 200 per cent tariff on European imports, targeting products such as wine, cognac, and other alcoholic beverages.