In August, there was a noticeable drop in consumer confidence across the United States. This downturn coincided with a shaky jobs report and the introduction of new tariffs imposed by President Donald Trump.
According to data released by The Conference Board, the consumer confidence index saw a decline of 1.3 points, settling at 97.4 this month.
What’s the Big Deal?
As reported by The Conference Board, individuals surveyed expressed worries over tariffs, rising prices, and job security. These concerns can significantly impact the political landscape, affecting both the influence of the president and lawmakers alike. Economic sentiment typically ranks among the top issues for voters, meaning how the public feels about the state of the economy can greatly sway policy decisions and election outcomes.
Key Takeaways
The U.S. Department of Labor and Statistics indicated that only 73,000 jobs were added in July, whereas experts had anticipated an increase of at least 100,000 jobs, CNN mentioned.
This month, new tariffs ranging from 10% and above on products from over 60 nations finally took effect after being delayed multiple times. Trump remarked on Truth Social, “IT’S MIDNIGHT!!! BILLIONS OF DOLLARS IN TARIFFS ARE NOW FLOWING INTO THE UNITED STATES OF AMERICA!” on August 6.
The consumer confidence survey is a monthly report providing insights into consumer attitudes, purchasing intentions, vacation plans, and inflation expectations.
Dr. Clement Bohr, an economist at UCLA Anderson Forecast, shared with Newsweek that there was an alarming drop in consumer confidence when Trump first suggested implementing tariffs. Although there was a slight recovery after the initial shock, it seems that as people start to feel the actual impact of these tariffs in their daily lives, the index has begun to drop once more.
According to The Conference Board, confidence decreased notably among younger consumers (those under 35 years), while those aged 35-55 maintained steady sentiment and individuals over 55 experienced a rise in confidence.
The current situation index, which gauges perceptions on current economic conditions, dropped by 1.6 points this month, and the expectations index fell by 1.2 points as well.
Most alarmingly, the likelihood of a recession has become a more common concern among consumers, with expectations peaking at levels not seen since April.
As Dr. Bohr pointed out, there’s an evident mismatch in consumer sentiment and the actual state of the economy, though he advised that while surveys are useful, their weight should perhaps be reconsidered.
Interestingly, consumers viewed both their current and future financial situations more positively.
Voices from the Field
According to Alex Jacquez, Chief of Policy and Advocacy at Groundwork Collaborative speaking to Newsweek: “Consumer confidence remains significantly lower than where it typically suggests a recession is impending. With mounting fears of rising prices after a brief easing period, slower labor market expectations are disconcerting as concerns about an economic downturn rise, proving it’s tough for Trump to sweep bad news under the rug, regardless of how many economists he dismisses.”
Dr. Clement Bohr reflected on the expectations index with Newsweek: “Historically, whenever that index falls below 80, it’s been a strong indicator of a forthcoming recession, leading many people to rightly fear trouble ahead.”
Stephanie Guichard, a senior economist from The Conference Board, commented in a recent press release: “Respondents pointed to tariffs more frequently this month, observing them as a catalyst for increasing prices. Concerns over high prices, especially in essentials like food and groceries, have arisen once again this August.”
What Lies Ahead
The upcoming consumer confidence report is set to be released on September 30.
Have a story tip for Newsweek or questions about this situation? Reach out at LiveNews@newsweek.com.
