Consumer sentiment sours amid trade war, recession fears: Survey
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(NEW YORK) — Consumer attitudes soured in March alongside slumping markets and growing concern about a possible recession, University of Michigan survey data on Friday showed. Sentiment worsened more than economists expected.
The figure marked the third consecutive month of dampening consumer attitudes, data showed.
Expectations about future economic conditions worsened in a slew of key areas, including personal finances, labor markets, inflation and stock markets, the survey said.
Consumer sentiment soured among both Democrats and Republicans, though it dropped more among Democrats, data showed.
On Thursday, the S&P 500 closed down more than 10% since a peak attained last month, meaning the decline officially qualified as a market correction. It marked the index’s first correction since October 2023.
The major stock indexes recovered some losses in early trading on Friday.
Consumers expect the inflation rate to rise to 4.9% over the next year, according to the survey, which marks a significant jump in year-ahead inflation expectations compared to survey results in February.
The current inflation rate stands at 2.8%, nearly a percentage point higher than the Federal Reserve’s target of 2%.
President Donald Trump’s tariffs last week set off an escalating global trade war. The U.S. slapped 25% tariffs on Mexico and Canada, some of which were delayed. Trump also imposed a 10% tariff on China, doubling taxes on Chinese imports to 20%.
Trump’s 25% tariffs on all imported steel and aluminum products took effect on Wednesday.
The array of duties on imported goods prompted retaliatory measures from China, Canada and the European Union.
Tariffs of this magnitude are widely expected to increase prices paid by U.S. shoppers, since importers typically pass along a share of the cost of those higher taxes to consumers.
Higher prices and looming economic uncertainty could scare off consumers, experts previously told ABC News. Consumer spending accounts for about two-thirds of U.S. economic activity.
Goldman Sachs last week hiked its odds of a recession from 15% to 20%. Moody’s Analytics earlier this week pegged the probability of a recession at 35%.
This is a developing story. Please check back for updates.
(WASHINGTON) — The U.S. added fewer jobs than economists expected in February, the first full month under President Donald Trump, according to government data released on Friday.
Employers hired 151,000 workers last month, falling short of expectations of 170,000 jobs added. The unemployment rate ticked up to 4.1%, which remains a historically low figure.
Stock market futures appeared to shrug off the disappointing report. Each of the three major stock indexes ticked up in the minutes following the data release.
Hiring picked up from January but fell slightly below the average number of jobs added each month last year.
Employment increased in a range of sectors, including health care, social assistance and finance, data showed.
However, the federal government shed 10,000 workers in February, indicating potential impact from employee cuts initiated by the Trump administration.
The fresh jobs report arrives during a turbulent period for U.S. stocks and trade relations in the aftermath of tariffs issued by the Trump administration earlier this week.
Despite the temporary withdrawal of some tariffs on Thursday, stocks dropped as fallout from the policy continued to roil markets.
The Dow Jones Industrial Average on Thursday tumbled about 425 points, or 1%, while the S&P 500 fell 1.7%. The tech-heavy Nasdaq sank 2.6%.
The tariffs stand among a flurry of economy-related directives issued since Trump took office, including spending cuts and the targeting of diversity, equity and inclusion initiatives.
The Trump administration has also terminated tens of thousands of federal employees, though such cuts are not expected to appear fully in the February report, in part due to the timing of surveys conducted by officials who collect the data.
Meanwhile, the economy is weathering a bout of resurgent inflation that stretches back to the final months of the Biden administration.
Consumer prices rose 3% in January compared to a year ago, registering a percentage point higher than the Federal Reserve’s target of 2%.
Egg prices, a closely watched symbol of rising costs, soared 53% in January compared to a year ago. BIrd flu has decimated the egg supply, lifting prices higher.
In February, a key gauge of consumer confidence registered its largest monthly drop since August 2021, the nonpartisan Conference Board said last month.
The share of consumers who expect a recession within the next year surged to a nine-month high, the data showed. A growing portion of consumers believe the job market will worsen, the stock market will fall and interest rates will rise, the report added.
Still, some measures of consumer sentiment improved. Consumers’ assessment of current business conditions moved higher, while an uptick in purchasing plans for a home extended a monthslong recovery.
Mortgage rates have dropped for seven consecutive weeks, FreddieMac data showed. The average rate for a 30-year fixed mortgage stands at 6.63%, its lowest level since December.
(WASHINGTON) — America’s closest neighbors, Canada and Mexico, excoriated President Donald Trump for slapping historic tariffs on goods from their countries.
Trump’s broad tariffs went into effect on Tuesday, along with increased duties on goods from China, a move that prompted a swift retaliation from Beijing.
“President Trump continues to demonstrate his commitment to ensuring U.S. trade policy serves the national interest,” the White House said in a statement.
Goods entering the U.S. from Mexico and Canada will carry a 25% tariff, while those from China will be subject to a 10% increase on existing tariffs, according to the White House.
U.S. tariffs are at their highest level since 1943, Yale’s Budget Lab said.
On Feb. 27, Trump alleged that illicit drugs such as fentanyl had continued to enter the U.S. through Mexico and Canada despite agreements reached last month to address the issue.
Since September, nearly all fentanyl seized by the U.S. came through the Southern border with Mexico, according to the U.S. Customs and Border Patrol, or CBP, a federal agency. Less than 1% of fentanyl was seized at the Northern border with Canada, CBP found.
Canadian Prime Minister Justin Trudeau sharply criticized the tariffs, calling them a “dumb” policy that does not “make sense.”
The reason for the tariffs is based on a false allegation about Canada as a major source of drugs entering the U.S., Trudeau added.
“It’s an example of [Trump] not really being able to see what it is that he wants, because even the excuse that he’s giving for these tariffs today of fentanyl is completely bogus, completely unjustified [and] completely false,” Trudeau said.
In response, Canada slapped a 25% retaliatory tariff on $30 billion worth of goods. Tariffs on an additional $125 billion worth of products will take effect in 21 says, Trudeau said.
“We will not back down from a fight,” Trudeau added.
Meanwhile, Mexican President Claudia Sheinbaum announced plans to impose retaliatory tariffs on U.S. goods.
“There is no motive or reason, nor justification that supports this decision that will affect our people and our nations,” Sheinbaum said. “We have said it in different ways: cooperation and coordination, yes; subordination and interventionism, no.”
Sheinbaum said she will speak over the phone with Trump on Thursday, and if no deal can be reached, she’ll announce the tariff and non-tariff measures at a rally on Sunday.
China’s response
Within minutes of the new U.S. tariffs taking effect, China unveiled on Tuesday its initial response by placing additional 10% to 15% tariffs on imported U.S. goods, like chicken, wheat, soybeans and beef.
Those duties will be on top of similar tariffs imposed back during the first Trump administration’s trade war in 2018. Some of those tariffs are already at 25%, though Beijing issued some waivers as a result of the 2020 “phase one” trade deal.
The new Chinese tariffs are set to come into effect for goods shipped out next Monday, March 10.
Stock prices plummet
Stock futures for the three major U.S. indexes were close to flat early Tuesday following the selloff on Monday as Trump announced his proposed tariffs would go into effect at 12:01 a.m.
Stock prices plummet
Stock futures for the three major U.S. indexes were close to flat early Tuesday following the selloff on Monday as Trump announced his proposed tariffs would go into effect at 12:01 a.m.
Asian markets were mixed on Tuesday. The Shanghai Stock Exchange climbed less than a percentage point, while the Nikkei in Japan slipped about 1.2% and the Hang Seng in Hong Kong closed down about 0.3%.
European markets mostly traded off on Tuesday, with the DAX in Germany down about 1.6% and the FTSE 100 slipping about 0.3% midday.
The U.S. tariffs arrived about a month after Trump granted Mexico and Canada a reprieve, having reached agreements with the two countries regarding border security and drug trafficking.
ABC News’ Zunaira Zaki and Anne Laurent contributed to this report.
Annabelle Gordon for The Washington Post via Getty Images
(NEW YORK) — Price hikes for gasoline and groceries could reach shoppers within days in the aftermath of tariffs imposed by the Trump administration, experts told ABC News.
Some products such as auto fuel and fresh produce will be hit with near-instant price increases, while others like cars, laptops and children’s toys will show hikes in the coming weeks and months, they said.
The Trump administration imposed 25% tariffs on goods from Mexico and Canada, as well as 10% tariffs on imports from China. The fresh round of duties on Chinese goods doubled an initial set of tariffs placed on China last month.
Mexico, Canada and China make up the three largest U.S. trading partners, accounting for a vast array of products ranging from everyday essentials to big-ticket purchases.
Tariffs of this magnitude would likely increase prices paid by U.S. shoppers, since importers typically pass along a share of the cost of those higher taxes to consumers, experts said.
“Higher tariffs will translate into higher prices for some products very quickly,” Mark Zandi, chief economist at Moody’s Analytics, told ABC News. “It will take longer for everything from vehicles to appliances to consumer electronics.”
In a series of social media posts last month, Trump said he would place tariffs on Canada, Mexico and China for hosting the manufacture and transport of illicit drugs that end up in the U.S.
During an address to a joint session of Congress on Tuesday night, Trump also sharply criticized tariffs imposed on U.S. goods by Canada, Mexico and China.
“President Trump continues to demonstrate his commitment to ensuring U.S. trade policy serves the national interest,” the White House said in a statement on Tuesday.
The U.S. imported $38.5 billion in agricultural goods from Mexico in 2023, making it the top recipient of such products, U.S Department of Agriculture data showed. Those imports include more than $3 billion worth of fresh fruits and vegetables.
Roughly 90% of avocados eaten in the U.S. last year originated in Mexico, USDA data showed. Other products with a high concentration of Mexican imports include tomatoes, cucumbers, bell peppers, jalapeños, limes and mangos.
These products will show price increases within days because fresh produce cannot be held on shelves for an extended period, meaning imports slapped with tariffs will soon reach shoppers, Jason Miller, a professor of supply chain management at Michigan State University, told ABC News.
“That’s what you’d expect to be hit the fastest,” Miller said.
A similar dynamic will play out for gasoline prices for some U.S. drivers living in regions that rely on crude oil from Mexico and Canada, said Timothy Fitzgerald, a professor of business economics at the University of Tennessee who studies the petroleum industry.
Mexico and Canada account for 70% of U.S. crude oil imports, which make up a key input for the nation’s gasoline supply, according to the U.S. Energy Information Administration, a government agency.
Those imports come primarily from Canada, which sends crude oil to U.S. refineries built specifically to process the crude and redistribute it as gasoline for cars and trucks. Gasoline that originates as Canadian crude reaches customers in the upper Midwest as well as some along the East and West coasts, Fitzgerald said.
Gas refiners and retailers retain the ability to alter prices multiple times per day, meaning price hikes may have hit some drivers as early as Tuesday, he added.
“Think about a digital board at a gas station – a couple taps to a button and the price goes up,” Fitzgerald said.
A second wave of price increases will hit a wide-ranging set of products over the coming weeks and months, some experts said.
A large share of consumer electronics – such as laptops, video game systems and smartphones – enter the U.S. from China, meaning the new tariffs will filter through into higher prices for those goods, they said.
Price hikes will ultimately hit children’s toys, since many of those products also originate in China, Miller said.
Some U.S. retailers appear to have been stockpiling children’s toys in anticipation of the tariffs, but the stored items will run out soon, he added.
“You probably don’t get much of a reprieve beyond April,” Miller said.
Prices for Mexico-made beer and tequila will also rise over the coming months, as will the cost of Canada-made maple syrup, Miller added.
Canada is the top source of imported U.S. eggs, adding stress to a supply chain already decimated by an avian flu outbreak.
Egg prices skyrocketed 53% over the past year, U.S. Bureau of Labor Statistics data showed last month.
Since the U.S. relies overwhelmingly on domestic egg production, however, a potential price increase for Canadian eggs is not expected to meaningfully drive up egg prices at U.S. stores, Miller said.
“But it certainly doesn’t make things better,” Miller added.
ABC News’ Jacob Eufemia contributed to this report.
