Topline
One economic indicator just flashed its strongest recession signal since 2013, according to a new survey from the Conference Board think tank, revealing the tense attitude among consumers despite a relatively strong present economic picture as President Donald Trump’s transformative economic strategy takes hold.
Consumers are getting rattled about the state of the U.S. economy.
Key Facts
The Conference Board’s expectations index plunged to a 12-year low of 65.2 in March, far below the 80 threshold which typically indicates a looming recession, according to the Conference Board.
The broader consumer confidence index was 92.9 in March, far below consensus economist forecasts of 94.5, according to FactSet, marking the lowest reading since February 2021.
The deterioration in sentiment coincided with increased warnings from economists that the U.S. could slide into an economic downturn spurred at least in part by Trump’s policies including tariffs, which could worsen inflation, and decreased immigration.
Roughly two-thirds of Americans believe it’s somewhat or very likely the U.S. will fall into a recession over the next year, matching February’s nine-month high.
Crucial Quote
“Consumers are spooked by headlines about higher tariffs and trade war, DOGE cuts, and the stock market selloff,” Bill Adams, Comerica’s chief economist, wrote in emailed comments.
Surprising Fact
Respondents’ expectations of their family financial situation six months from now declined to the lowest level since July 2022. The “worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations,” explained Conference Board senior economist Stephanie Guichard.
Contra
Financial markets may have already shaken off their most severe recession fears. The S&P 500 benchmark U.S. stock index is up almost 5% from its March 13 nadir, a recovery led by growth stocks thought to be more vulnerable to a recession, including Nvidia and Tesla, both of which are up 10% or more over the last two weeks.
Key Background
The National Bureau of Economic Research defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months,” identifying two such instances over the last two decades, the Great Recession from December 2007 to June 2009 and the sharp but brief COVID-19 recession from February to April 2020. Concerns about a potential upcoming recession emerged earlier this month as the Atlanta Federal Reserve forecasted negative economic growth in 2025’s first quarter and Trump and Treasury Secretary Scott Bessent both declined to rule out a recession as Trump’s tariff-driven policies took hold. The likelihood of a recession “has moved up but it’s not high,” Fed Chairman Jerome Powell said last week.
Further Reading
