Money talks, and right now Americans aren’t feeling confident about their financial future. Consumer confidence numbers crashed to 92.9 for March 2024, hitting lows not seen since early 2021. The numbers paint a stark picture. While unemployment sits at a seemingly healthy 4.2%, over half of consumers view the economy through a negative lens.
The Breakdown You Need To Know:
CultureBanx noted that the mood shift matters, because consumer dollars fuel nearly two-thirds of all U.S. economic activity. This 7.2-point tumble caught market watchers off guard, falling short of their 94.5 prediction. Even more telling is Americans’ outlook on jobs, income and business dropped to 65.2, the weakest showing in 12 years.
“Consumers’ expectations were especially gloomy, with pessimism about future business conditions deepening and confidence about future employment prospects falling to a 12-year low,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board in a press release.
Older Americans showed the steepest decline in confidence. The Consumer Confidence Board report indicates that consumers aged 55 and older led the downturn, followed by those between 35 and 54 years old. Yet consumers under 35 years old showed increased confidence. The decline touched households of all income levels, with all but one group, those earning more than $125,000 annually, showing decreased confidence.
Treasury Yields Flash Warning Signs:
Even with the U.S. Consumer Confidence Index dropping 15% causing recession fears to mount, it’s not the only thing they are worried about. Other concerning findings from the report include:
- Stock market outlook turned negative with only 37.4% of respondents expecting higher equity prices in the next year, down 10 percentage points from February
- Average 12-month inflation expectations rose from 5.8% in February to 6.2% in March
- The proportion of consumers anticipating a recession remains at a nine-month high
- Consumers’ assessments of their Family’s Expected Financial Situation weakened to a 2½-year low
The treasury yield curve suggests a high probability of recession ahead, according to JPMorgan. Wall Street veterans watch this commonly known “Fed’s favorite recession gage” closely, as its track record speaks volumes. History shows tight monetary policy typically precedes economic downturns. Not to mention that Wall Street has missed the mark on GDP forecasts two years running.
Wall Street Split on Recession:
Big banks can’t agree on recession odds. Reuters reported that JPMorgan pegs chances at 40%, while PIMCO sees 35% risk in 2025, up from 15% in December. Moody’s matches that 35% forecast, with Chief Economist Mark Zandi calling it “uncomfortably high and rising”. However, corporate America looks more worried as 60% of CFOs in CNBC’s latest survey expect recession by late 2025, with 15% betting on 2026.
American shoppers are rushing to beat price hikes. Families are stocking up on TVs, fridges, washers and microwaves. This is what the Consumer Conference Board calls “likely pre-emptive buying before tariffs lead to price increases”.
What’s Next:
Now U.S. consumers expect a 5.1% price jump over the next year, which is the highest since May 2023 and up from 4.7% last month. The math hurts since prices have risen approximately 20% since the beginning of 2021, while paychecks grew just 17%, according to Marketplace.
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