Americans are more downcast than ever about the economy, with sentiment at near record low levels. Economists projected that the consumer sentiment index would fall to 55 in May. Now some recent developments have given the public cause for alarm. That survey period for the preliminary report closed on May 13th. It really reflected the mood about an hour before a very important announcement on tariffs was about to come out.
All year long, President Donald Trump’s tariffs and policy reversals have exacerbated growing concerns over an impending recession. These measures have been a direct drag on sentiment readings every month, resulting in persistent anxiety about the future of our economy. The administration has not enacted consistent mercantilist trade policies. As a consequence, the average American is starting to experience the squeeze on their wallet.
On May 12, the US and China threw everyone for a loop by announcing a thaw. As part of this agreement, the U.S. made a major, albeit unilateral, de-escalation of tariffs. This announcement marks a significant new chapter in U.S.-China trade relations. Tensions have historically defined their relationship, which makes this shift all the more remarkable. At the time economists and analysts considered this development an important potential lightning rod for boosting overall economic sentiment.
With the announcement coming out precisely as our survey period started. This remarkable coincidence led to the hope that this new-found goodwill might be used to reduce some of the more egregious harms caused to consumers. Yet, even with this short-lived glimmer of hope, the shadow of the cumulative impact of all the tariffs enacted so far remains heavy on the American psyche.
As positive economic indicators keep coming in, so many of our citizens are still understandably wary. They’ve got their eyes peeled on how this de-escalation in tariffs is going to affect their bottom line in the days and months ahead. Analysts suggest that while the announcement may offer some hope, it is essential for the government to implement consistent policies that foster stability in order to build long-term confidence among consumers.