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Consumer sentiment is hitting rock bottom on fears that the economy could slip into a recession after President Donald Trump announced sweeping tariffs against all nations trading with the United States.
Inflation declined marginally in March but it is unlikely that the Federal Reserve will resume its interest rate cuts immediately, as the central bank prefers to wait and watch the economic situation for some time before taking a decision.
Given this situation, it would be wise to invest in safe-haven stocks like consumer staples. In this regard, Carriage Services, Inc. CSV, Reed's, Inc. REED and BellRing Brands, Inc. BRBR are lucrative buys. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The stocks are also from the low-beta category (beta greater than 0 but less than 1). Hence, the recommended approach is to invest in low-beta stocks with a favorable Zacks Rank.
Consumer Sentiment Hits a Low
Consumer sentiment fell to 50.8 in April, declining 10.9% from March’s final reading of 57 and also lower than the consensus estimate of a reading of 54.6, the University of Michigan survey showed. April’s reading is 34.2% below the year-ago levels. This is also the lowest reading since June 2022 and the second-lowest ever since 1952.
The five-year inflation outlook jumped 0.3% to 4.4%, the highest level since June 1991. The current economic conditions index declined 11.4% to 56.5 in April, from the prior month. The expectations index dropped 10.3% from March to 47.2 in April and hit its lowest level since May 1980.
Recession Fears Dent Sentiment
Trump’s tariffs have already rattled markets. The President announced a baseline 10% tariff on all trading partners of the United States last week and a whopping 145% tariff on Chinese imports. Wall Street saw $6.2 trillion wiped out of markers in just two sessions following the announcement.
Trump, a day later, announced a temporary 90-day pause on tariffs on all countries, with the exception of China. Stocks rebounded, with indexes making historic gains. However, the fears haven’t subsided as the halt is temporary and investors are still unclear on how Trump plans to move forward with the tariffs.
Moreover, high inflation remains a cause of concern. Inflation declined unexpectedly in March but the fears of an economic slowdown are far from over. The consumer price index (CPI) declined 0.1% sequentially in March after climbing 0.2% in February. This was the first time that the CPI declined since May 2020.