Consumers are feeling okay about the present situation, but they are losing their confidence in the future. The obvious cause of their anxiety is Trump Turmoil 2.0. The Trump administration admits that its trade and DOGE policies might cause some economic pain in the short run but says they should lead to big gains in the long run ("The Golden Age of America").
The problem is that we Americans don't do pain very well. Americans are worrying that a recession is becoming more likely and that means fewer jobs. As a result, yesterday's big rally in the stock market stalled today following the release of the March consumer confidence report this morning. We continue to expect a choppy stock market for the next couple of months.
Consider the following:
(1) Confidence. The Consumer Confidence Index (CCI) dropped sharply to 92.9 during March, to the lowest reading since January 2021 (chart). The drop was led by the CCI expectations component to 65.2, the lowest reading in 12 years. The CCI present situation component dipped but remained relatively high.
(2) Job expectations. The percentage of respondents in the CCI survey expecting fewer jobs in 12 months rose to 28.5% in March from 16.2% last October (chart). The percentage expecting the same availability of jobs fell from 65.4% to 54.8% over this same period. That magnitude of decline has coincided with the start of previous recessions.
