American Consumer Confidence Plummets to Lowest Level Since 2020 Amid Rising Fears

American households are feeling the weight of economic uncertainty. In April 2025, the Conference Board’s Consumer Confidence Index dropped to 86.0, down 7.9 points from the prior month and the lowest since May 2020. This steep decline, which fell short of analysts’ expectations of 87.5, reflects growing unease about the future of jobs, income, and business conditions. Consumers across all walks of life, from young professionals to retirees, expressed a level of pessimism not seen in years.

The Expectations Index, which gauges outlooks for the next six months, took the hardest hit, plummeting 12.5 points to 54.4, a level last recorded in October 2011. This figure sits well below the 80-point threshold that often signals an impending recession. Meanwhile, the Present Situation Index, reflecting current economic conditions, slipped slightly to 133.5. The stark contrast between these two metrics suggests that while today’s economy feels stable to some, the horizon looks increasingly grim.

Several factors are fueling this downturn. Survey responses highlighted tariffs, inflation, and stock market volatility as top concerns. New trade policies, including increased tariffs, have raised fears of higher prices for everyday goods, from groceries to electronics. Consumers frequently cited these policies as a source of anxiety, with mentions of tariffs reaching an all-time high in write-in responses. Inflation, though down to 2.4% in March 2025, continues to strain budgets, particularly for essentials like food and fuel, where price increases have outpaced wage growth.

The labor market, while still resilient, shows signs of softening. Job growth slowed to an average of 152,000 per month in early 2025, compared to 209,000 late last year. The unemployment rate, steady at 4.2%, remains low by historical standards, but 32.1% of consumers now expect fewer jobs in the coming months, a level of concern not seen since the Great Recession. This fear is particularly acute among those aged 35 to 55 and households earning over $125,000, groups that typically anchor economic optimism.

High interest rates are another drag. With 30-year mortgage rates near 7.8% and credit card rates at 22.8%, borrowing costs are at their highest in decades. These rates make it tougher for families to finance homes, cars, or even daily expenses, prompting a pullback in spending. The National Retail Federation projects retail sales growth will slow to 3.7% in 2025, a sharp drop from the double-digit gains of recent years, as households prioritize necessities over discretionary purchases.

The decline in confidence cuts across demographic lines. Unlike past dips, which often spared certain groups, this downturn affects nearly everyone. Younger consumers worry about job prospects, while older ones fear eroding savings. High-income households, once insulated from economic swings, now share the same concerns as those with less. Political affiliation offers little buffer; supporters of both major parties report similar levels of unease, a rare point of unity in a polarized landscape.

Supply chain disruptions add another layer of frustration. Though less severe than during the pandemic, ongoing issues, compounded by new tariffs, have led to higher prices and occasional shortages, particularly for smaller retailers. The Federal Trade Commission notes that large firms have managed these challenges better, leaving smaller businesses and lower-income consumers to bear the brunt. Over half of surveyed consumers say they’ve changed their buying habits, opting for cheaper alternatives or delaying purchases altogether.

Analysts offer varied explanations for the slump. Some point to trade policies, arguing that tariffs have driven up costs and clouded the economic outlook. They note that the sharp drop in the Expectations Index reflects fears of slower growth and higher prices. Others emphasize structural issues, like the uneven distribution of economic gains. Despite wage growth of 21% since 2020, many households, particularly those with lower incomes, struggle with the rising cost of essentials and depleted savings from the pandemic era.

There’s also debate over the role of corporate practices. Some analysts highlight the Federal Trade Commission’s findings on grocery price hikes, suggesting that supply chain power imbalances allow larger firms to pass on costs to consumers. Others argue that global uncertainties, from geopolitical tensions to volatile markets, are bigger drivers of the sour mood. Both sides agree on one point: the pervasive pessimism could dampen spending, potentially slowing the broader economy.

The sharp drop in consumer confidence raises questions about the economy’s trajectory. If households continue to pull back, reduced spending could weaken growth, especially in retail and services, which rely heavily on consumer demand. Economists warn that the Expectations Index’s plunge below 80 is a red flag, though not a definitive predictor of recession. The labor market’s resilience offers some hope, with sectors like healthcare and retail still adding jobs, but any further softening could deepen the gloom.

For now, Americans are bracing for tougher times. Whether driven by policy shifts, global pressures, or persistent inflation, the erosion of confidence reflects real anxieties about the future. Policymakers, businesses, and consumers alike face the challenge of navigating this uncertainty, with the hope that targeted measures or unexpected improvements might restore a sense of stability.