The News
The US consumer confidence index fell to its lowest reading in four years, new data released Tuesday showed, as Americans face higher costs and fret the fallout of US President Donald Trump’s trade policy.
Another metric that measures Americans’ expectations about the economy’s future also reached a 12-year low. The findings show how Trump’s tariffs, the trade war, and market volatility have begun to weigh on households, as economists warn of rising odds of a recession. Consumers are also facing sticky inflation and high borrowing costs.
The US Federal Reserve forecasts only two interest rate cuts this year, while the Atlanta Fed President Raphael Bostic told Bloomberg Tuesday that he now sees just one owing to slowing progress on inflation.
SIGNALS
CFOs are also worried about the economy
It’s not just consumers: C-suite executives are growing more pessimistic about the US economy’s future, too. In a recent CNBC survey of chief financial officers, 60% say they expect a recession in the second half of 2025 — up from just 7% who anticipated a 2025 recession in the previous survey. A sizable majority predict higher inflation, and said Trump’s unpredictable policy approach is impacting decision-making: “Complete chaos, without an end game strategy,” one CFO said, though another was hopeful things would calm down after Trump’s first 100 days. Their wariness is a vast contrast from the animal spirits that defined the three months post-election.
Hard data vs. soft data debate signals another ‘vibecession’
The consumer sentiment reading highlights the diverging nature of economic figures that has defined the first two months of the second Trump administration. While “soft data” surveys measuring confidence and optimism suggest economic decline and widespread fear, “hard data” like government statistics present a different picture, with unemployment low and business and manufacturing activity picking up. The contrast has sparked a debate over whether we’re in another “vibecession,” where feelings about the economy don’t match the reality, Bloomberg wrote. If the soft data is “going to affect the hard data, we should know it very quickly,” Fed Chair Jerome Powell said last week. “And of course we will understand that. But you don’t see that yet.”