US consumer confidence hits 5-year low in April amid tariff concerns

US consumer confidence fell sharply in April, hitting its lowest level in nearly five years, as anxiety over tariffs and economic uncertainty weighed heavily on Americans’ outlook.

The latest data from the Conference Board underscores growing fears about the country’s economic direction amid signs of slowing growth and persistent inflation.

The Conference Board’s Consumer Confidence Index dropped to 86.0 this month, down from a revised 93.9 in March — the weakest reading since May 2020, at the peak of the COVID-19 economic disruption.

The decline was far steeper than economists had expected, with Reuters’ poll forecasting a milder drop to 87.5.

Consumers brace for tougher times

Two key components of the index revealed deeper concerns among consumers.

The Present Situation Index, which measures how Americans view current business and labor conditions, dipped slightly to 133.5.

More worryingly, the Expectations Index, which gauges the short-term outlook for income, jobs, and business conditions, fell by 12.5 points to 54.4.

That’s the lowest level since October 2011 and significantly below the 80 threshold that often signals an approaching recession.

Tariff pressures and slowing growth

One of the major factors behind the growing economic pessimism is the fear of rising tariffs.

With the Trump administration’s latest wave of import duties looming, many businesses have ramped up shipments in recent months to avoid costlier future imports.

However, this stockpiling is now expected to weigh heavily on GDP growth.

According to a Reuters survey of economists, U.S. gross domestic product (GDP) likely grew at just a 0.3% annualized rate in the first quarter of 2025 — the slowest pace since Q2 2022.

The Atlanta Federal Reserve’s GDPNow model is even more bearish, projecting a 0.4% contraction once trade adjustments are accounted for, including shifts in gold imports and exports.

Consumer spending under pressure

Persistent inflation and economic uncertainty have also put a damper on consumer spending, a key driver of US economic growth.

With prices still elevated and household savings dwindling, many Americans are choosing to pull back on discretionary purchases.

Analysts say that unless consumer sentiment improves, the economy may continue to lose momentum.

As the White House and policymakers assess the trade and monetary environment, investors and market participants are watching closely for signs of a broader slowdown.

A protracted dip in consumer confidence could not only signal weaker spending ahead but also pose challenges for the Federal Reserve as it navigates inflation control and growth support.

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