'Dumb economic policy': Consumer confidence nosedives after month of Trump presidency

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26 February

Donald Trump, accompanied by his wife Melania, attends a New Year's Eve event at Mar-a-Lago in Palm Beach, Florida, U.S., December 31, 2024.

With the first month of U.S. President Donald Trump's second term in office characterized by threats to impose tariffs on close international allies and the mass firing of tens of thousands of federal workers—but not the promised lower grocery prices that Trump repeatedly touted during his campaign—a survey found consumer confidence plummeted in February to its lowest level since last June.

The Conference Board, a global nonprofit think tank, reported on Tuesday the sharpest monthly decline in consumer confidence in four years, with the index dropping from 105.3 in January to 98.3 this month.

Economists had projected the index to read 103 in February, but with respondents telling the Conference Board that they were concerned about inflation and Trump's tariffs plan, consumer anxiety was higher than experts had anticipated.

Trump said shortly after taking office that he would impose tariffs on imports from Canada and Mexico, only to suspend them for several weeks. On Monday, the president said at a news conference that the tariffs would start next month.

The impending policy has set off fears of a trade war and higher costs for U.S. consumers.

Trump's proposal—and his "flip-flopping every couple of days" on imposing the tariffs, said Rep. Ro Khanna (D-Calif.), "hurts working-class Americans."

Low consumer sentiment and confidence, said Jared Bernstein, former chair of the United States Council of Economic Advisers, "is clearly tied to Trump administration actions, especially tariffs and the extensive focus on retribution over working families' living standards."

While references to tariffs in consumers' responses to the survey were at their highest level since 2019, said Stephanie Guichard, senior economist for global indicators at the Conference Board, mentions of "inflation and prices in general continue to rank high" as well.

Trump focused heavily on the prices of eggs and other staple groceries during his campaign, but prices have risen in the last month, partially due to the spread of bird flu among flocks across the country—a crisis that the Trump administration reduced its ability to respond to this month when the U.S. Department of Agriculture accidentally fired several employees who had been working on the outbreaks.

NPR noted in a memo that a survey out of University of Michigan this week also showed that consumer sentiment dropped 10% this month from January.

Christopher Rupkey, chief economist at financial markets research firm FWDBONDS, told Al Jazeera that the mass firing of roughly 30,000 federal workers has also led to growing anxiety among consumers about labor markets, a potential coming recession, and the health of the economy.

"Americans are increasingly pessimistic about the outlook," Rupkey told the outlet. "No federal government has ever before threatened government workers with mass firings and it is starting to scare the daylights out of consumers."

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