U.S. consumer confidence experienced a significant decline in February 2025, reflecting growing concerns over inflation and the economic implications of President Donald Trump's policies. The Conference Board's consumer confidence index dropped to 98.3 from January's 105.3, marking the largest monthly decrease since August 2021.

Unexpectedly sharp decline: The downturn surpassed the expectations of economists, who had anticipated a reading of 102.5. The decline was broad-based, affecting various age and income groups, with notable decreases among individuals aged 35 to 55. ​

Inflation tops the worry list: Several factors contributed to this decline in consumer sentiment, foremost among them were escalating inflationary pressures. Consumers' 12-month inflation expectations surged to 6% from 5.2% in January, the highest since May 2023. This uptick is attributed to rising prices of essential commodities, such as eggs, and apprehensions about the impact of new tariffs on imports.​

Tariff trepidations: President Trump's recent implementation of additional tariffs on Chinese imports, coupled with proposed levies on goods from Mexico and Canada, has heightened fears of increased consumer prices. These trade policies have led to a sharp rise in mentions of trade and tariffs in consumer surveys, reaching levels unseen since 2019. ​

Unemployment looms large: The labor market, a critical component of economic health, also showed signs of weakening, in contrast to the sentiment of a few months ago. The Conference Board's survey indicated that consumers' views on current labor market conditions deteriorated, with the labor market differential—a measure correlating to the unemployment rate—declining to 17.1 from 19.4 in January. This suggests a growing perception that jobs are becoming harder to secure.