Consumer confidence fell sharply in February as Americans wrestled with stubborn inflation and the looming threat of more tariffs.
A report from the Conference Board Tuesday showed the sharpest one-month drop in confidence since August 2021. Consumers are particularly nervous about rising prices, with the outlook for inflation a year from now jumping to 6% — double the current rate.
"This increase likely reflected a mix of factors, including sticky inflation but also the recent jump in prices of key household staples like eggs and the expected impact of tariffs," said Conference Board economist Stephanie Guichard. "There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019."
President Trump has added a 10% tariff on imports from China, and is threatening additional taxes, including a 25% levy on imports from Canada and Mexico that could take effect next week.
"The tariffs are going forward, on time, on schedule," Trump told reporters at the White House Monday.
A threatened tax on imported steel and aluminum could put more upward pressure on grocery prices, which have already been climbing.
Egg prices jumped more than 15% in January, as avian flu continues to weigh on the nation's flock of laying hens. Denny's restaurants followed Waffle House in adding a surcharge to menu items containing eggs.
Consumers are also feeling less confident about the job market, as the Trump administration moves to cut thousands of jobs in the federal government. The Conference Board's expectations index, which measures the outlook for jobs, income and business conditions, fell more than 9 points in February to 72.9. Readings below 80 are considered a warning sign for possible recession.
The Conference Board is a non-partisan think tank that conducts regular surveys on the economy. Its confidence index for February echoes a similar report on consumer sentiment from the University of Michigan last week.
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