Is there a recession coming? Many consumers think so.

Key Takeaways

• Worries about President Donald Trump’s policies led to a decline in consumer confidence for the fourth consecutive month. Economic expectations also fell into recession territory.
• The survey showed that inflation expectation increased in March due to fears that tariffs would increase the price.
• The consumer also expressed greater concern about their future incomes, the prospects of stock markets, and the state of the labor market.

Economic expectations have not been this low for over a decade, possibly signaling a future recession.

The Conference Board Consumer Confidence Index dropped 7.2 points to 92.9% in March. It is the lowest since 2021. The Wall Street Journal and Dow Jones Newswires also surveyed economists who expected it to be lower.

Bret Kenwell said that the economic concerns and policy uncertainty are taking their toll on investors, consumers, and businesses. 

Expectations Index Drops Hardly into Recession Territory

The Expectations Index fell by almost 10 points, which measures consumers’ short term outlook for incomes, business conditions, or the labor market. 

The Conference Board reported that the 65.2 index reading is the lowest in twelve years and well below the threshold 80, which typically signals a coming recession. Nearly 2/3 of respondents said it is “somewhat likely”, that the U.S. economy will enter recession within the next year. 

“Consumers expectations were particularly gloomy. Pessimism regarding future business conditions increased and confidence in future employment prospects fell to a 12-year-low,” said Stephanie Guichard. She is a senior economist at The Conference Board. 

Consumers Cite Concerns About Inflation & Tariffs

The confidence level dropped for the fourth consecutive month, as consumers worried about the tariff policies of President Donald Trump and the potential costs that they could create. The survey showed that consumers believe inflation will increase to 6.2% within the next year, a rise from the previous month.

“Written-in answers also showed that consumers are still concerned about inflation and that worries over the impact of trade policy and tariffs, in particular, are on the rise,” said the report. “There was also more mention than usual of economic and policy uncertainty.”

The survey showed that consumers’ outlook on the labor market and their income prospects had also deteriorated. For the first since 2023, consumers are now less optimistic about the stock market. Only 37.4% of respondents expect stock prices to increase over the next 12 months.

“Confidence declined in most income and generational cohorts. Older and higher income groups recorded the biggest declines.” This is likely due to the recent stock market decline and could reverse if risk assets find a footing,” said Oren Clachkin, financial markets economist at Nationwide. 

The monthly confidence survey shows that consumers are becoming more concerned about the direction the economy is taking, especially in light of the uncertainty surrounding tariffs.  Economists are closely watching consumer confidence surveys, which can have a big impact on consumer spending, which makes up about two-thirds of the U.S. economy.