Until there is more economic certainty, American consumer sentiment will remain vulnerable
Consumer confidence has been under scrutiny in recent months, due to investors' concerns about retail sales and consumer spending, the engine of the U.S. economy. If consumer confidence continues to decline, it is logical that consumer spending, which accounts for about two-thirds of U.S. GDP, will also be pressured. A reduction in spending could ripple throughout the economy.
The consumer confidence index has once again fallen short of economists' expectations, marking the fifth consecutive result since the November report came in below estimates. If there is anything positive, it is that each of the previous results was revised upward the following month. However, the most recent reading is the lowest since January 2021.
Confidence continues to decline among investors, consumers, and businesses as economic concerns and uncertainty about economic policy intensify. Until there is greater certainty in the tariff and macroeconomic arena, confidence and sentiment remain vulnerable. From now on, investors will focus their attention on this week's GDP and PCE reports (the latter being the inflation indicator preferred by the Fed) and next week's employment report to better understand the current economic context.