April 29, 2025
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The Conference Board reported that consumer confidence fell 7.9 points in April to 86.0 after having fallen 6.2 points in March and 5.2 points in February. After hitting a peak in November confidence has plunged in the past five months as consumers worry about the inflationary impact of tariffs and the prospect of possibly losing their jobs.
Senior Economist at the Conference Board, Stephanie Guichard, said, “Consumer confidence declined for a fifth consecutive month in April, falling to levels not seen since the onset of the COVID pandemic. 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. 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. 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. However, consumers’ views of the present have held up, containing the overall decline in the Index.
Tariffs are making consumers nervous and their inflation expectations for coming years have been on the rise. At the same time their expectations for future growth seem to be shrinking and in the eyes of some a recession is possible late in the year. We have a hard time getting as pessimistic. The economy keeps cranking out new jobs although the pace of job creation is slowing down a bit. Trump is promising significant de-regulation in coming months. The stock market And most economists expect GDP growth this year of 0.8%. We are looking for GDP growth of 1.9% for the year.
Given the magnitude of the earlier declines in confidence in the past thee months one might have expected a sharp pullback in consumer spending. But that has not happened. Instead, real consumer spending has risen 3.3% in the past year. With real disposable income rising 1.7%, we expect consumer spending to climb by about 2.0% in 2025.
The current 4.3% funds rate should be unchanged at the end of 2025. That should reduce mortgage rates from 6.8% currently to 6.5% by the end of 2025. That should tend to boost the pace of economic activity.
Confidence data reported by the Conference Board are roughly matched by the University of Michigan’s series on consumer sentiment. As shown in the chart below, trends in the two series are identical but there can be month-to-month deviations.
Stephen Slifer
NumberNomics
Charleston, SC
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