Consumer Confidence Crashes as Tariff Fears Grow

Dear Reader,

Consumer sentiment in the U.S. has just taken a sharp dive, hitting its lowest level since late 2022. The culprit? Rising fears that President Donald Trump’s sweeping tariffs will drive prices higher and disrupt the economy.

According to the latest University of Michigan Consumer Sentiment Index, confidence dropped to 57.9, far below expectations. The drop was felt across political lines, with Republicans, Independents, and Democrats all expressing their concerns about the economic outlook, and the uncertainty surrounding Trump’s shifting trade policies, particularly his recent threat of a 200% tariff on European wine and spirits, has left both businesses and consumers struggling to plan for the future.

Tariffs are fueling inflation?

• Nearly half (48%) of consumers in the survey cited tariffs as a major worry, expecting them to push up prices across the board.

• Short term inflation expectations soared to 4.9%, marking the highest level since late 2022.

• Long term inflation forecasts hit 3.9%, a level not seen since 1993.

• Unlike previous inflation spikes, consumers now believe rising prices will be long-lasting, not temporary.

Economic and Market Fallout

Stocks rebounded slightly after a sharp selloff, but Treasury yields rose as investors reassessed the inflation outlook. Meanwhile, the Federal Reserve faces growing pressure, will they step in with rate cuts, or hold firm in the face of persistent inflation fears?

Adding to the mix is the ongoing impact of Elon Musk’s Department of Government Efficiency (DOGE), which has slashed thousands of federal jobs and forced agencies to prepare for mass layoffs. Economists warn that this aggressive downsizing, combined with erratic trade policy, could further weaken consumer confidence and slow spending.

What comes next?

• The Fed meets next week, with markets betting on potential rate cuts later this year.

• The White House continues to escalate the trade wars.

• Consumer spending is at risk, with fears that a prolonged downturn in sentiment could hurt key industries like housing, travel, and retail.

The U.S. economy is going through some uncertain times. If tariffs continue to push inflation higher while consumer confidence crumbles, we could be heading for a very  turbulent rest of the year.

Be informed,
 Grand Crypto Insider