(VOR News) – According to a poll published on Tuesday by a business inflation research organisation, consumer confidence in the US fell significantly in February.
This represented the biggest monthly drop in over four years. This cut came at a time when inflation seemed to be stagnating and a growing number of Americans believed that a trade war under President Donald Trump’s administration was the most likely scenario.
According to the Conference Board, the consumer confidence index showed a notable reduction, falling from 105.3 in January to 98.3 this month. There was a notable drop in the amount. According to the results of the FactSet research, economists predicted a value of 103, which is much less than the real amount.
Seven points is the greatest monthly drop since August 2021.
Since then, the drop has been the most notable. Wall Street markets immediately experienced a significant decline. During the midday trading session, the Dow Jones Industrial Average and the S&P 500 both held steady at their previous levels. The S&P 500 saw a 0.6% drop. There was a 1.1% decline in the Nasdaq.
Due to a notable increase in mentions of trade and tariffs, the board polled the public, which showed that respondents were worried about inflation. The significant increase in discussions of trade and tariffs prompted the Inflation board to launch the investigation.
The Conference Board stated on Tuesday that Americans’ short-term expectations for their income, business, and employment market fell 9.3 points to 72.9. According to the Conference Board, a grade of less than 80 could indicate the start of a recession.
According to the board, during this time, the percentage of consumers who anticipate a recession in the following year has reached a nine-month high. This surpasses all earlier eras.
This month, consumer perceptions of the state of affairs fell by 3.4 points, to 136.5. Additionally, consumers’ Inflation perceptions of the job market declined compared to the previous month.
In a statement issued on Tuesday, the group stated that “perceptions of the labour market have deteriorated.” Customers showed increasing pessimism about the state of the company sector and started to question their ability to produce future income.
The average degree of pessimism about future job prospects has increased over the past ten months, reaching its highest level.
By the end of 2024, consumers had earned their trust and spent large amounts during the holidays. This guarantee gave them confidence, and they went ahead and made their purchases. On the other hand, the cold temperatures caused a sharp drop in January retail sales in the United States.
Retail and car dealership transactions decreased due to inflation.
According to a report released this week by the Department of Commerce, retail sales for December decreased by 0.9%. After two months of strong market trends, the market had its largest significant decline in a year.
Furthermore, inflation is still a problem that needs constant attention. The Federal Reserve has responded to this by taking a more cautious stance on interest rates.
Although it remained constant at the most recent meeting, the Federal Reserve has lowered its benchmark borrowing rate in each of the previous three sessions. In addition, Federal Reserve officials have recently expressed concerns about the policies that the next administration would implement.
Experts claim that current economic data that is negative for the US economy is coupled with a negative change in the psyche of American households.
In a note to clients, Carl Weinberg, chief economist at High Frequency Economics, wrote, “We anticipate a decelerating economy.” “Given the indicators Inflation reflecting diminishing consumer and business confidence and sentiment, we anticipate an economic slowdown.”
The consumer confidence index measures how Americans feel about the status of the economy right now and how they anticipate it to expand over the next six months.
To understand American consumer sentiment, economists regularly examine consumer purchasing patterns, which make up around two-thirds of the US economy.
SOURCE: AP
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