The U.S. consumer confidence index dropped to its lowest point in five years, mainly due to worries about tariff policies.

The World Large Enterprises Federation reported on April 29, 2025, that the United States Consumer Confidence Index fell to 86.0 in April, the lowest since May 2020, marking the fifth consecutive month of decline. Consumers are pessimistic about the future economy, employment, and income, especially worried about the high tariffs on Chinese goods, which has become a key factor in the drop in confidence. The tariffs have caused supply chain strains and increased prices, further impacting consumer spending plans.

Consumer Confidence Index Falls for Fifth Straight Month

According to the Conference Board's "April 2025 Consumer Confidence Survey," the overall Consumer Confidence Index® fell by 7.9 points to 86.0 in April (with 1985 as the base of 100 points), not only below the market expectation of 88 but also significantly lower than the revised 93.9 in March. This figure marks the lowest point since the early days of the COVID-19 pandemic in 2020.

The index is composed of two sub-indices: the Present Situation Index and the Expectations Index. The Present Situation Index slightly declined by 0.9 points to 133.5, while the Expectations Index plummeted by 12.5 points to 54.4, the lowest since October 2011, and well below the 80-point threshold that typically signals a recession.

Tariffs Become Top Concern for Consumers

In this survey, mentions of "tariffs" by consumers reached a record high. According to the Conference Board, many respondents explicitly expressed concerns that tariffs would drive up prices and negatively impact the overall economy. This phenomenon is closely related to the recent U.S. government policy of imposing tariffs as high as 145% on Chinese goods.

According to an Associated Press report, President Trump recently imposed high tariffs on almost all Chinese imports, extending to sectors such as steel, aluminum, and automobiles. These measures have triggered supply chain tensions, leading retailers like Walmart and Target to face the dual challenges of inventory pressure and rising costs. Consumers have reacted strongly, fearing that price increases and product shortages will affect their daily lives.

Deteriorating Employment and Income Expectations

Consumer confidence in the job market has also significantly declined. In April, 32.1% of respondents expected fewer job opportunities in the next six months, approaching levels seen during the peak of the 2009 financial crisis. Conversely, only 13.7% expected job opportunities to increase, down from 16.7% in March.

Additionally, expectations for future income have turned negative. Only 15.0% of consumers expect their income to increase, down from 17.1% in March, while 18.2% expect their income to decrease, up from 14.9% the previous month. This is the first time in five years that a net negative outlook on future income has been observed.

Inflation and Financial Market Volatility Intensify Pessimism

The survey shows that consumer expectations for inflation over the next 12 months have risen to 7%, the highest since November 2022. Although official inflation data has not yet shown a significant increase, consumers generally feel the pressure of rising living costs.

At the same time, financial market instability has also impacted consumer sentiment. 48.5% of respondents expect the stock market to decline in the next year, the highest proportion since October 2011. This reflects shaken investment confidence, further weakening overall economic confidence.

Confidence Decline Spans All Age and Income Groups

The trend of declining confidence spans all age groups and most income brackets, with the most significant drops among those aged 35 to 55 and households with an annual income exceeding $125,000. These groups are typically the main drivers of consumption and investment, and their declining confidence could have broader impacts on overall economic activity.

Reduced Spending Plans: Decrease in Travel and Dining Expenditures

According to the survey, the proportion of consumers planning to travel abroad in the next six months has dropped from 24.1% in December last year to 16.4%. Additionally, the proportion planning to increase dining expenditures has seen the largest decline in recent years. These data indicate that consumers tend to cut back on non-essential spending in the face of economic uncertainty.

Tariff Policies Trigger Supply Chain and Price Pressures

According to reports from the United Daily News and Cnyes, since the U.S. imposed tariffs on Chinese goods in early April, the volume of goods shipped from China has plummeted by 60%. Shipping companies, to avoid a collapse in freight rates, have cut back on voyages, further tightening supply chains. Retailers like Walmart initially asked Chinese suppliers to bear the tariffs but switched to absorbing the tariff costs themselves on April 26 due to inventory pressure and resumed imports from China.

According to data from the National Retail Federation, the Consumer Price Index (CPI) annual growth rate in April 2025 reached 9.8%, with tariff costs accounting for as much as 43%. This makes tariffs a hidden regressive tax affecting the purchasing power of low-income households.

The U.S. consumer confidence index dropped to its lowest point in five years, mainly due to worries about tariff policies.

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