According to the University of Michigan, consumer confidence has declined for the third consecutive month and is currently at its lowest level since November 2022 when the Biden administration was facing a significant inflation surge similar to that of the early 1980s.
Moody's Analytics noted that Americans' sentiments reflect an economy typically seen during a deep recession. This situation is comparable to what President Trump encountered, where despite a thriving economy, there existed a gloomier electorate perception.
A contrast between the two administrations lies in the fact that during 2023 and 2024, the Biden economy showed signs of gradual improvement with decreasing inflation and steady employment and economic growth rates. This resulted in what seemed like a "soft landing" as the economy avoided the usual recession accompanying inflation control efforts.
On the contrary, the Trump economy is not manifesting any improvement, contradicting the optimism voters had regarding enhanced prosperity under his leadership. Deterioration is predominantly attributed to Trump's policies, suggesting that the downbeat consumer outlook might be predicting an impending downturn.
Although soft data reflects a general pessimism, hard data indicates that the economy is currently stable. Federal Reserve Chair Jerome Powell highlighted this during the Fed's recent policy meeting, emphasizing concerns raised by surveys and the urgency to address resulting risks.
The challenge faced by Biden's administration was the alignment of soft data with hard data, which impacted the negative voter sentiment and contributed to Trump winning last year's presidential election. Presently, Trump could anticipate a shift toward weakness in hard data, affirming the prevalent negative economic outlook.
Market reactions in real time to Trump's tariff implementations indicate a notable decline in the S&P 500 stock index. While US stocks are adversely affected, stock markets in other countries, such as Canada, Mexico, Germany, and China, have been performing significantly better in the same period.