The Consumer Confidence Index took a major downturn in the month of March, declining by 7.2 points to 92.9. This decrease represents its lowest point since March 2021. This sharp decline in consumer sentiment signals increasing apprehension about impending tariff wars and their effects on the economy. Expectations have fallen to a 12-year low of 65.2. Economists and market analysts are keeping a close eye on this one, with the Conference Board sounding the alarm that a reading of 80 or above typically indicates an impending recession.
Business and consumer surveys are scanning the skies for signs of a US economy on the verge of recession. This decline happens throughout that critical evaluation window. Corporate America needs to land the figurative plane as cleanly and graciously as possible. Worries are increasing that a much more severe economic shock is waiting in the wings. Consumer sentiment data that disappointed expectations for March added to what has been a tough week for the US dollar. Soft new home sales data have added to the currency’s woes.
Consumer confidence is quickly reversing, after a short-term increase in consumer confidences spurred by the 2016 election victory. More importantly, this increase happened just as the president-elect started to make his campaign promises reality. The deepening global trade strife has thrown a dark shadow, sending consumer confidence to a four-year low.
That’s why international markets are reacting so strongly. When the American session began on Tuesday, the EUR/USD was still doing well, remaining well above 1.0800. The relationship between US economic data and currencies throughout the world is an issue that still fascinates investors and policymakers.