As inflation continues to rise and a number of fresh data raise concerns only days before the White House escalates its trade war, consumers’ economic pessimism is growing.
According to a widely followed federal report released Friday, stubborn inflation and sluggish spending coincided in February, when a large portion of President Donald Trump’s tariff agenda was announced but not yet put into effect. According to the research, many households are cutting back on eating out and hotel stays in order to pay for more expensive grocery and medical care.
As Trump’s trade war and expenditure cuts threaten to make matters worse, the banking firm ING referred to the latest figures as “ugly” and highlighted the persistent threats of stagflation, stating that “we are moving in the wrong direction.”
One “silver lining” to the report, according to Wells Fargo analysts, is that “income growth was broad and supported by decent wage gains.” The researchers however cautioned of a “ugly” quarter ahead. However, “based on consumers’ reported inflation expectations, which have been increasing, they will require the additional assistance,” they added.
It is true that consumers are becoming more pessimistic.
According to the University of Michigan’s most recent survey, which was also made public on Friday, economic confidence fell 12% this month, and future prospects fell 18%. Republicans “joined independents and Democrats in expressing worsening expectations since February for their personal finances, business conditions, unemployment, and inflation,” according to the researchers, who also described “a clear consensus.”
