Consumers feel like they're on 'a very scary roller coaster.' That's bad news for Trump's economy.

Dow Jones

Yesterday

MW Consumers feel like they're on 'a very scary roller coaster.' That's bad news for Trump's economy.

Andrew KeshnerAarthi SwaminathanVenessa Wong

Trump's first months in office have seen the steepest drop in consumer expectations since the 1990 recession

The economic plans of President Donald Trump make Daniella Knight nervous. More than a little.

"I'm terrified, to be honest," said the Annapolis, Md., mother of three, who worries about what tariffs could mean for a trip to the store if costs go up.

Politicians are "not going to get affected if the price of milk goes up or the price of flour or rice or beans goes up," Knight, 46, told MarketWatch. "They're not going to get affected if the price of electronics goes up."

Knight looks at the economy and sees "a very scary roller coaster."

Trump returned to the White House after a campaign vowing to improve the finances of Americans who had been buffeted by rising prices and dimming affordability during Joe Biden's presidency.

But 100 days into Trump's administration, many measures of consumer confidence, perception and vibes suggest many Americans, like Knight, are feeling worse than they did when Trump took office.

More Americans feel pessimistic about their money, job prospects and the economy, according to an array of polling. Some people are acting on their worries, scrapping big-ticket purchase plans, like cars, home and travel. Companies are noticing the caution.

"Consumer sentiment is down. Business sentiment is down. Investor sentiment is down. You can see that in the stock market. And all those things ultimately have real economic consequences," Moody's Analytics Chief Economist Mark Zandi told MarketWatch. "The economy is going to weaken here based on that."

The plunge in sentiment is largely tied to Trump's global tariffs, which sent the stock market into a freefall when they were first announced, and have created an uncertain future for the U.S. economy. Trump says the levies will result in better trade deals, boost domestic manufacturing and create more wealth for Americans. But the latest forecast from RSM US, an accounting and consulting firm, puts the chances of a recession over the next 12 months at 55%. Many consumers are spooked, fearing higher prices and a slowing economy.

"Pretty much across the board and across the vast swathes of demographic groups, consumers are getting increasingly pessimistic, compared to where they were at the end of last year," said Joanne Hsu, director at the University of Michigan's Surveys of Consumers.

Read also: 5 charts that show how Trump's first 100 days have shaped Americans' finances

The widely-watched monthly survey hasn't asked respondents specifically about tariffs, but participants keep bringing it up in open-ended responses. "It is clearly on their mind," Hsu said. The University of Michigan's consumer-sentiment gauge reported a modest increase in late April after the White House partially paused some tariffs, but it was still the weakest sentiment reading in 32 months.

The survey goes back decades, and in the first four months of a year following a presidential election, consumer mood sometimes brightens or darkens, Hsu said - but the shifts are usually subtle. "It looks like a bunch of wiggles," Hsu said.

Not now.

There's been a "very conspicuous" drop of approximately 30 percentage points in consumer expectations since January, said Hsu. "It's not a wiggle," Hsu said. "It's going down."

That drop is the sharpest decline since the 1990 recession, according to Hsu.

Other measures show Americans' outlooks are darkening. A record-breaking 53% of people said their financial situation was getting worse, according to Gallup polling released April 21. In more than two decades of polling, that tops a record last set in April 2020, when 50% said their finances were deteriorating as the pandemic set in.

Pollsters talked to people in the first half of April, as the Trump administration unveiled its "liberation day" tariff plan and stock-market convulsions painted a rough picture for 401(k)s.

Monthly polling from the Federal Reserve Bank of New York also indicates souring mood. In January, nearly 37% of consumers said their financial situation would be better off in a year. By March, that share shrank to roughly 29%. The share who expected a worse situation grew to 30% from 21%.

The gloom is not bipartisan

With Trump in office, Republicans are much more chipper about their finances and the economy, flipping hard from their Biden-era concerns. Democrats have performed the acrobatics in reverse.

Less than a third of Republicans (28%) told Gallup their finances were worsening in early April. It was a 40-point swing from a year ago, when 68% said things were looking worse. Three-quarters of Democrats said their finances were getting worse, in a 55-point swing from a year ago, when 21% said their finances were fraying.

More than half of independents (54%) felt their finances were declining, versus 48% last April, Gallup's polling said.

For Trump, there appears to be a wellspring of support from right-leaning consumers. But there are leaks.

People in the president's political party commonly view the economy more favorably, Hsu said. But she's seeing expectations creep lower from Republican-identified survey participants too.

"They may think the pain is worth it, but they are increasingly expecting pain, when they weren't expecting pain in December."

Seven in 10 Republicans told Morning Consult in December that they supported tariffs and the percentage barely ticked down to 69% this month. But opposition to tariffs among Republicans grew to 20% from 13%.

"Everyday Americans vividly remember how President Trump's America First policies of tariffs, tax cuts, deregulation and domestic energy production ushered in historic job, wage and economic growth during his first term," said White House spokesman Kush Desai. "The entire Trump administration is aligned on once again delivering a historic economy while continuing to secure our southern border and streamline our bloated government."

Mood matters - if consumers 'don't feel confident, they will scale back'

What people tell pollsters is one thing. The state of their wallets may be another matter.

Americans endured four-decade-high inflation and many people sank into debt during the Biden administration. But the economy also expanded, consumers spent money and the labor market kept adding jobs.

The term "vibecession" sprang from the gap between people's negative perceptions of the economy and its performance on paper during the Biden administration. The disconnect may still exist.

Under Trump so far, there's still a low unemployment rate and an economy that's adding jobs. Last month's jobs report beat Wall Street forecasts. That's even when the administration carried out massive cuts to the federal workforce through its so-called Department of Government Efficiency.

But more people are getting nervous about their job security. Last month, a Glassdoor gauge of employee confidence stayed near the record-low level it hit February. The share of respondents who were concerned about losing their job over the next year also reached a survey high of 32%, according to a separate survey by Fannie Mae (FNMA).

The housing giant is keeping tabs on mood, because nervous people may be rethinking home purchase plans. About one in four people who live in America are canceling plans to make a big purchase such as a home or a car because of the Trump administration's tariff policies, according to a Redfin $(RDFN)$ survey.

The pullback in demand is halting what was already a slow housing market. "More homes are hitting the market at the same time buyers are pulling back due to economic uncertainty," Daryl Fairweather, chief economist at Redfin, told MarketWatch.

Other signs of consumer weakness are emerging. More homeowners are missing payments on their mortgages. The number of borrowers who missed multiple months of payments on their mortgages in March, the latest month for which data is available, was up 14% from last year, according to data from Intercontinental Exchange $(ICE)$. The bulk of the mortgages were loans backed by the Federal Housing Administration, which are typically taken on by first-time buyers or lower-income buyers.

Retail spending is another fast-moving signal on how consumers are feeling, according to Selma Hepp, chief economist for Cotality. There are mixed signals in that data though.

In March, retail sales surged to a 26-month high. That surge was likely powered by consumers buying big items before tariffs hit. Some tariffs, like a 145% levy on Chinese imports with certain exemptions, are in effect. Others, like so-called reciprocal tariffs against many countries, are on pause. But a 10% baseline tariff against the countries is in effect.

Middle-income households in particular say they plan to cut their spending on discretionary items in anticipation of tariffs.

Companies are bracing for a slowdown and a cloudy future. Last week, American Airlines $(AAL)$ and Southwest Airlines $(LUV)$ withdrew their financial forecasts in a signal they didn't know what to expect ahead.

During the first quarter, Chipotle Mexican Grill $(CMG)$ saw a dip in same-store sales for the first time since 2020, and economic worries were the "overwhelming reason," CEO Scott Boatwright told analysts last week. Consumers are hitting "pause," according to an executive at Procter & Gamble $(PG)$ , the company behind everyday brands like Pampers, Gillette, Crest and Tide.

Domino's Pizza $(DPZ)$ said Monday its U.S. same-store sales were lower, but international same-store sales were higher.

People make spending and saving decisions based on where they think the economy is heading, Hsu said. "If they don't feel confident, they will scale back." Consumer spending powers roughly two-thirds of GDP, she noted.