Americans are becoming increasingly worried about the situation in the economy, while President Donald Trump leads an unpredictable trade war that could cause inflation in the US, and even cause a recession.
The confidence of the consumer fell in April for 7.9 points to 86, published Conference Board in the latest survey on Tuesday. It is the lowest level of May 2020. year and a larger decline than economists expected. The expectation index – which measures the view of the citizens on the future of the economy – it fell by 12.5 points, at 54.4, which is the lowest level in the last 13 years.
Meanwhile, the share of Americans who expect a recession in the next year, he rose to the highest level in two years, showed a survey. Trump’s Customs Laws were “on top of consumer consciousness”, according to their written comments, writes CNN.
President Donald Trump during the meeting with Nayib Boukele, President of El Salvador, in the oval office of the White House in Washington, 14. April.
“Consumers explicitly mentioned the concern that customs will increase the prices and negatively affect the economy,” the Conference Board said in the announcement.
While the Trump Administration enters 100th day in power, various surveys and research show growing pessimism among American consumers. Their consumption is a source of American economic strength and makes up about 70% of GDP.
Since the government’s arrival in January, Trump introduced a chaotic customs regime, reduced the number of employees in the Federal Administration, tightened immigration policies and attacked federal reserves. Its measures not only disturbed consumers, but also caused concern at Wall Street.
In June 2022, when the consumer confidence fell on the lowest level in history, while inflation reached a four-year-old highlight, the Americans still spent money in the coming months.
Similarly happened in 2023, when the stalemate in the Congress was worried about the upper borrowing of the borrowing, but people went massively to concerts and travel that year.
Economist study from the federal reserves, published on Thursday, showed that people in recent years have overridged inflation on their own finances, which affected their perception of the economy. Researchers have linked answers to surveys with proven data on purchases from 2019. to 2024.
Nevertheless, some Federal Reserve officials are still concerned about the bad mood among consumers and opportunities to really reduce consumption this time.
“I think there are many reasons for consumption concern,” said the President of the Fed from Richmond, Thomas Barkin, last week at a single event in Virginia. “For example, the consumer mood has fallen significantly in recent months, and people seem more concerned about inflation and job loss.”
Fed officials are also concerned about aggravated price perceptions among citizens in recent months, which could make it difficult for the central bank against inflation, especially if the Trump Trade War further encourage price growth. Inflation expectations can become self-fulfilling prophecy – if people expect price growth, adapting consumption accordingly.
Inflation expectations for the next year increased in April to 7%, according to the Conference Board – the highest level of November 2022. A similar survey Michigan also records the growth of these expectations.
However, there are other major changes in politics in sight.
Congress under the control of the Republicans, which returned from a two-seater break, is expected to adopt the Law on Extension of Trump’s tax reliefs in 2017, for which economists say they could encourage the economy – but only later.
“There will be a slowdown caused in the second half of 2025, but the fiscal policy will restart the economy 2026,” says Nicole Cervi, economist from Wells Fargo. “We expect a drop in personal taxes across the country, and our assessment is that households will receive an additional $ 150 billion available in 2026.”
Finance Minister Scott Bessent told reporters on Monday that “the economic agenda of the President has three pillars: trade, taxes and deregulation, and we hope that we will be the part related to taxes end up by 4. July.”
Trump went a step further in tax reliefs, arguing on Sunday that he would abolish income tax and replace him with customs revenues, although such a proposal would come across numerous obstacles.
(Vijesti.ba)
