Consumer confidence plunges most in nearly 4 years as inflation fears escalate on Trump tariff threats
Published On Feb 25, 2025, 11:08 AM
In February 2025, consumer confidence in the U.S. experienced its most significant drop in almost four years, attributed largely to escalating fears over inflation connected to tariff threats from former President Trump. The Conference Board's Consumer Confidence Index fell to 98.3, down from a revised 105 in January, and below the anticipated 102.5. Notably, the 'Expectations Index' fell below the warning threshold of 80, historically indicating a potential recession. This sharp decline reflects growing concerns surrounding current economic policies, particularly with 25% tariffs on steel and aluminum expected to take effect soon, which many believe will further exacerbate inflation, as costs for essential goods are likely to rise.
Stock Forecasts
XLY
Negative
The decline in consumer confidence suggests potential reductions in spending, especially from higher-income households that have been significant drivers of economic growth. If consumer spending slows, this could negatively impact various sectors, particularly consumer discretionary stocks. Moreover, fears of rising inflation due to tariffs add to the potential for reduced profitability for companies facing higher input costs. Investors should be cautious, particularly in consumer cyclical and retail sectors.
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