Consumer Confidence Buckles As Trump’s Policies Revive Inflation Concerns

Consumer confidence plummeted in February as more Americans grapple with concern that President Donald Trump’s policies could slow growth and cause prices to rise, according to a new survey.

The Conference Board’s widely cited consumer confidence index notched its sharpest monthly decline since August 2021, when the country was experiencing a resurgence of Covid-19 variants. The index now stands at 72.3, well below the threshold that normally signals an imminent recession, as respondents reported increasing pessimism over income, business and labor market conditions. Average 12-month inflation expectations also spiked as Americans face higher prices on eggs and other household staples, according to the group's summary of its findings released Tuesday.

“Consider these figures a flashing yellow light regarding growth and inflation prospects,” Mohamed El-Erian, chief economic adviser at the European insurance giant Allianz, posted on X shortly after the results were reported.

The decline in confidence echoes similar findings that were reported by the University of Michigan’s sentiment survey last week. It’s a sign that the economic honeymoon that graced the early days of the Trump administration could be short-lived as the president powers ahead with new trade and immigration policies that some analysts say could weaken the economy’s expansion and cause consumer goods prices to climb.

“There was a sharp increase in the mentions of trade and tariffs” among survey respondents, the Conference Board’s senior economist Stephanie Guichard said in a statement. “Most notably, comments on the current Administration and its policies dominated the responses.”

El-Erian said the concerns “extend well beyond the American economy. The last thing the global economy needs right now is a stagflationary wind from the U.S., which has been the most dependable driver of global growth,” he said.

The White House did not immediately respond to a request for comment.

Surging inflation and economic pessimism — even in the face of low unemployment and wage growth — severely undercut political support for former President Joe Biden’s administration. Trump administration officials have pointed to recent, less favorable economic indicators as a consequence of what they call rampant federal spending under Biden.

Kevin Hassett, the director of Trump’s National Economic Council, last week told reporters that the combination of spending reductions overseen by Elon Musk’s Department of Government Efficiency and the extension of Trump’s 2017 tax cuts will lead to “an explosion of supply and a reduction in government demand, then inflation goes way down.”

“We’re incredibly optimistic about the future of inflation and the future of our economy,” Hassett said.