As new U.S. tariffs go into effect, concerns over an impending economic downturn are mounting. President Donald Trump further fueled uncertainty over the weekend, stating on Fox News’ Sunday Morning Futures, “Look, we’re going to have disruption, but we’re OK with that.”
Rising Consumer Concerns
Consumers are increasingly worried about their financial future. A New York Federal Reserve survey released Monday found that 27.4% of households expect a worsening financial situation in the next year, the highest since November 2023.
Additionally, the perceived likelihood of missing a minimum debt payment in the next three months surged to 14.6%, the highest since April 2020, near the start of the COVID-19 pandemic.
Inflation and Household Budgets
“The past few months have shown a resurgence in price increases in many food and energy products,” said Greg McBride, chief financial analyst at Bankrate.com. “Coupled with shelter costs that continue to increase faster than many workers’ wages, the pressure on household budgets is unrelenting.”
Economists say Trump’s tariffs on imports from Canada, China, and Mexico will likely drive up prices on essential consumer goods. A recent survey found that 86% of Americans believe trade tensions will negatively impact their personal finances.
Consumer Confidence Drops
The Conference Board’s consumer confidence index saw its steepest drop since August 2021, while the University of Michigan’s consumer sentiment index indicated heightened fears of renewed inflation.
“Millions of Americans are doing okay right now, but feel like their financial situation could go from pretty good to pretty dicey in a hurry if they were to encounter a job loss, a medical emergency, or some other unexpected event,” said Matt Schulz, chief credit analyst at LendingTree.
Looking Ahead
With tariffs in place and economic uncertainty growing, economists warn that the next few months could bring further volatility. Market analysts will be closely watching inflation trends and consumer spending behaviors to gauge the broader impact of Trump’s trade policies.