Tariff worries drive consumer confidence to 5-year low

The Conference Board said its consumer confidence index dropped by 7.9 points in April, marking its lowest reading since May 2020, largely in response to President Trump's tariff war.

Trump has imposed a baseline 10 percent tariff on most international partners and a 145 percent tariff on China, the world's second-largest economy. Steep "retaliatory tariffs" on most of America's other trading partners are on hold.

The fall in consumer confidence was seen across political affiliations, according to the board. Consumers between 35 and 55 years old, and consumers in households earning more than $125,000 a year, saw the sharpest decrease. 

“Consumer confidence declined for a fifth consecutive month in April, falling to levels not seen since the onset of the COVID pandemic,” Stephanie Guichard, a senior economist at The Conference Board, said in a statement. 

“The decline was largely driven by consumers’ expectations. The three expectation components—business conditions, employment prospects, and future income—all deteriorated sharply, reflecting pervasive pessimism about the future,” she added.

Consumers explicitly mentioned concerns about tariffs increasing prices and having negative impacts on the economy, according to the board, which noted a majority of respondents complained about the high cost of living amid inflation.

About 1 in 3 survey participants said they expected business conditions to worsen, while 15.7 percent of consumers expected business conditions to improve.

“Notably, the share of consumers expecting fewer jobs in the next six months (32.1%) was nearly as high as in April 2009, in the middle of the Great Recession,” Guichard said. 

“In addition, expectations about future income prospects turned clearly negative for the first time in five years, suggesting that concerns about the economy have now spread to consumers worrying about their own personal situations," she added. "However, consumers’ views of the present have held up, containing the overall decline in the Index.”

Short-term outlooks for income, business and labor market conditions dropped to 54.4, measuring the lowest level since October 2011. The number falls well below the threshold of 80 that usually signals a possible recession ahead, the board said.

The monthly Consumer Confidence Survey is based on an online sample representing millions of consumers. The cutoff date for the preliminary results was April 21.

Updated at 11:42 a.m. EDT