Consumer Confidence Plunges as Inequality and Tariffs Hit Hardest

In April 2025, the pulse of American optimism flickered. The Conference Board’s Consumer Confidence Index plummeted to 86.0, a jarring 7.9-point drop that marks the lowest reading since the darkest days of May 2020. This isn’t just a number; it’s a collective sigh from households grappling with uncertainty. The Expectations Index, which gauges hopes for income, jobs, and business conditions, cratered to 54.4, a level not seen since 2011 and a stark warning of recessionary fears. For families across the country, the future feels less like a promise and more like a gamble.

What’s driving this unease? The answer lies in a toxic brew of policy missteps and economic pressures. New tariffs, championed by President Trump’s administration, have sent shockwaves through markets and households alike. Inflation, though slightly eased to 2.4% in March, continues to gnaw at budgets, with food and gas prices climbing faster than wages for many. Meanwhile, the cost of borrowing—mortgages at 7.8%, credit cards at a punishing 22.8%—has turned dreams of homeownership or financial stability into distant fantasies for millions.

This decline cuts deep, sparing no group. From young professionals to retirees, from high earners to those scraping by, the data paints a grim picture. Over 32% of consumers now expect fewer jobs in the coming months, a pessimism rivaling the Great Recession. For the first time in five years, more Americans anticipate shrinking incomes than growing ones. The weight of these numbers falls hardest on those already stretched thin: lower-income households, who face the brunt of rising costs with dwindling savings.

Yet this moment is more than a statistical blip. It’s a referendum on an economic system that feels rigged against the many. Advocates for equitable growth argue that this crisis of confidence reflects not just policy failures but a deeper betrayal of the American promise. The question now is whether we can chart a path forward that restores faith in shared prosperity.

At the heart of this economic malaise lies a policy choice that has backfired spectacularly: the aggressive tariffs imposed under President Trump’s trade agenda. Survey respondents cited tariffs as a top concern at unprecedented levels, and for good reason. These measures, intended to protect American industries, have instead driven up prices for imported goods, from electronics to groceries. The Federal Trade Commission’s recent report on grocery supply chains lays bare the fallout: higher prices and shortages hit smaller retailers and low-income consumers hardest, while corporate giants weather the storm.

The evidence is damning. Retail sales growth, once a post-pandemic bright spot, is projected to slow to a meager 3.7% in 2025, as consumers pull back on discretionary spending. Over half of Americans have changed their buying habits, opting for cheaper alternatives or delaying purchases altogether. This isn’t economic resilience; it’s survival. Advocates for fair trade policies contend that these tariffs, far from strengthening the economy, have deepened inequality by disproportionately burdening those least equipped to absorb the costs.

Supporters of the administration’s approach argue that tariffs are a necessary bulwark against global competition, claiming they’ll bolster domestic jobs. But this logic crumbles under scrutiny. The labor market, while stable with unemployment at 4.2%, shows signs of cooling, with job growth slowing to 152,000 per month in early 2025. Consumers aren’t buying the promise of long-term gains when their immediate reality is higher prices and shrinking opportunities. The administration’s gamble on protectionism has instead fueled a cycle of inflation and distrust.

Beyond tariffs, the decline in consumer confidence exposes a more enduring wound: economic inequality. While wages have risen 21% since 2020, the gains are uneven. Lower-income households, battered by years of stagnant wages and pandemic-era disruptions, face prices for essentials that far outstrip their earnings. The University of Michigan’s Consumer Sentiment Index, at a dismal 52.2 in April, underscores this divide, reflecting a 32% drop from a year ago. For many, the American dream feels like a relic.

This isn’t a new story, but it’s one we’ve failed to address. The pandemic laid bare the fragility of household finances, with millions depleting savings to cover basic needs. Now, with interest rates at decades-high levels, borrowing to bridge the gap is no longer an option for many. Advocates for progressive economic policies argue that this moment demands bold action: targeted relief for struggling families, stronger oversight of corporate pricing, and investments in affordable housing and healthcare to ease the cost-of-living crisis.

Opponents of such measures, often aligned with the current administration, claim that market-driven solutions and deregulation will lift all boats. But this trickle-down fantasy ignores the reality: corporate giants have thrived while smaller businesses and consumers bear the cost of supply chain disruptions and price hikes. The FTC’s findings on grocery price gouging point to power imbalances that favor the few, not the many. Without intervention, the gap between the haves and have-nots will only widen, dragging confidence—and the economy—down with it.

The road ahead is daunting, but not impassable. Restoring consumer confidence requires a rejection of policies that prioritize short-term posturing over long-term stability. Economists and advocates for equitable growth urge a pivot toward measures that directly address household pressures: rolling back tariffs that inflate costs, expanding tax credits for low- and middle-income families, and accelerating investments in infrastructure to create jobs and stabilize supply chains. These steps, grounded in historical successes like the New Deal or post-2008 recovery efforts, could rebuild trust in an economy that works for all.

Equally critical is addressing the psychological toll of uncertainty. Consumer confidence isn’t just about dollars and cents; it’s about belief in a shared future. Policymakers must confront the partisan rancor that amplifies economic fears, fostering dialogue that prioritizes solutions over division. The broad-based nature of this decline—spanning age, income, and political lines—offers a rare opportunity to unite around common goals: security, opportunity, and fairness.

The alternative is grim. If tariffs persist and inequality festers, the Expectations Index’s plunge below 80 signals a recessionary cliff we’re perilously close to crossing. The administration’s defenders may point to a still-robust labor market or partisan optimism among their base, but these are fleeting consolations when 32% of Americans foresee job losses and purchasing plans for homes and cars are at multiyear lows. The data doesn’t lie: without a course correction, the economic expansion that has sustained us risks unraveling.

America stands at a crossroads. The Conference Board’s April 2025 reading of 86.0 is more than a statistic; it’s a warning that the foundation of our economy—consumer trust—is eroding. Tariffs, inflation, and inequality have conspired to dim the hopes of millions, and the administration’s current path offers little relief. Advocates for a fairer economy are sounding the alarm: we cannot afford to ignore the voices of those struggling to make ends meet.

This is a call to action. We need policies that lift up the vulnerable, not burden them with higher costs. We need leadership that bridges divides, not deepens them. The promise of a thriving, equitable America is still within reach, but only if we act with urgency and conviction. Let this moment of waning confidence be the spark that ignites a renewed commitment to shared prosperity.