(NEW YORK) — A new survey of consumers on Tuesday is expected to show attitudes worsened in April, casting further gloom over the economy as President Donald Trump’s tariffs set off warnings of price increases and a possible recession.
A reading of sour consumer sentiment would mark the fifth consecutive month of decline, leaving the Conference Board gauge at its lowest level since the early months of the COVID-19 pandemic.
Federal Reserve Chair Jerome Powell this month joined a growing set of policymakers and analysts who’ve cautioned about a possible outcome that bodes poorly for consumers: accelerating price increases alongside a sluggish economy.
A slew of companies have already announced plans for price hikes in response to the tariffs, including bargain retailers Temu and Shein.
Meanwhile, recession fears are mounting on Wall Street. Goldman Sachs earlier this month hiked its odds of a recession from 35% to 45%. JPMorgan pegged the probability of a recession this year at 60%.
Trump earlier this month paused so-called “reciprocal tariffs” on most U.S. trade partners, but the White House also raised its cumulative tariffs on Chinese goods to 145%.
An across-the-board 10% tariff applies to nearly all imports, except for semi-conductors, pharmaceuticals and some other items. Those levies come on top of specialized tariffs on steel, aluminum and autos.
Even after the suspension of some tariffs, U.S. consumers face the highest average effective tariff rate since 1909, the Yale Budget Lab found.
In recent days, Trump has voiced mixed messages about the prospect of a de-escalation in the trade war with China.
Trump last week said that tariffs on China would “come down substantially.” Days later, however, Trump urged Boeing to “default China” in response to a Chinese order that airlines reject deliveries of the U.S.-based aerospace company’s planes.
“This is just a small example of what China has done to the USA, for years,” Trump said in a post on social media.
Despite flagging consumer sentiment and ongoing market turmoil, key measures of the economy remain fairly strong.
The unemployment rate stands at a historically low level and job growth remains robust, though it has slowed from previous highs. Meanwhile, inflation cooled in March, putting price increases well below a peak attained in 2022, data showed.
The sturdy data offers little reassurance, some economists previously told ABC News.
Measures of the economy like inflation and hiring are released a month after the data is gathered, and they often reflect slow-moving shifts in business or consumer behavior, the economists said. As a result, such measures can prove outdated, especially when the economy is in flux.
Consumer spending, which accounts for about two-thirds of U.S. economic activity, could weaken if shopper sentiment sours. In theory, a slowdown of spending could hammer some businesses, prompting layoffs that in turn further shrink consumer appetite.
Speaking at the Economic Club of Chicago earlier this month, Powell acknowledged the “solid condition” of the U.S. economy, but he cautioned about signals of a potential slowdown. For instance, Powell noted a “sharp decline in sentiment” among businesses and households.
“Life moves pretty fast,” Powell added.
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