The latest University of Michigan data reveals a sharp decline in consumer sentiment, with its index dropping to 57.9 in March—the lowest since November 2022. This follows a 7.8-point monthly plunge in February, driven by escalating concerns over President Donald Trump’s trade policies and their inflationary impact. Long-term price expectations surged to 3.9% over the next five to ten years, the highest since 1993, while short-term inflation forecasts rose to 4.9% for the coming year.
Economic Uncertainty Takes Flight
The aviation sector, once a post-pandemic bright spot, is now reflecting consumer caution. Delta Air Lines slashed its first-quarter profit forecast by half, citing weakened corporate and leisure travel demand.
CEO Ed Bastian attributed the slowdown to “consumers in discretionary businesses [avoiding] uncertainty,” worsened by safety concerns following recent accidents. Rivals United and American Airlines also revised guidance downward, with United retiring 21 aircraft to cut costs amid reduced government-related travel.
Retailers Signal Shift to Essentials
Walmart, traditionally resilient during economic downturns, warned of slower profit growth as shoppers pivot toward essentials like groceries and household items. “We don’t want to get out over our skis here. It’s prudent to have an outlook that is somewhat measured,” said CFO John David Rainey.
Dollar General CEO Todd Vasos noted customers are “only buying basics,” with many sacrificing even necessities due to inflation.
The Trump administration’s tariff expansions on China, Canada, and Mexico have heightened fears of price spikes, with Deloitte warning these measures could “jeopardise ongoing economic growth.”
Economists at the Atlantic Council project tariffs could push inflation above 3%, complicating Federal Reserve efforts to meet its 2% target. Meanwhile, Goldman Sachs maintains a cautiously optimistic outlook, forecasting 2.5% GDP growth in 2025 despite policy uncertainties.
While the Philadelphia Federal Reserve’s Survey of Professional Forecasters anticipates 2.4% annual GDP growth and stable unemployment, the Atlanta Fed’s GDPNow tracker suggests a potential first-quarter contraction. Comerica Bank’s Bill Adams warns the confidence slump threatens consumer spending, which drives two-thirds of U.S. economic activity.
Companies like Dick’s Sporting Goods and Abercrombie & Fitch expressed guarded optimism about late-2025 recovery, though current guidance remains subdued. The Federal Reserve faces a delicate balance: tightening policy to combat inflation risks or easing to support growth amid tariff-induced headwinds.
“The jury has returned—the conclusion is clear. Trump’s policies are detrimental to America’s future prosperity,” one analyst noted.