Consumer sentiment continued to weaken in March. When consumers were feeling down during the Biden administration, it was dubbed the "vibecession." But has Yahoo Finance Senior Columnist Rick Newman explains in the video above, it's different this time.
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Consumer sentiment continues to decline falling to the lowest level since November 2022. The downward trend does not appear to have relief in sight. The outlook on President Trump's economy does not even is doesn't seem to be improving. Here with more Yahoo Finance senior columnist, Rick Newman. Um Rick, we were calling it when it was the Biden economy, the vibe session, where the data was good and people didn't feel good about it. What should we call this one?
I think, uh, consumers might be onto something here. I think, unlike the Biden administration, the economy might be following or trailing consumer sentiment here. Uh, I'm gonna have to come up with a catchy phrase for that. Julie, that'll be my assignment for next week. But the difference between the vibe session and today is this. Uh, during, uh, let's say in 2022, fall of 2022, which is the last time consumer sentiment was as low as it was, we knew then that, um, inflation was the main thing that was bumming people out. But, but inflation was improving while at the same time, uh, employment was holding up, growth was holding up, and that continued for the next two years. Unfortunately, for Biden, um, consumers, uh, voters never gave Biden credit for that. Um, but the economy was better than people thought it was. Now, the situation that we're in is the so-called hard data is still pretty much holding up, but a lot of forecasters think that's not going to be the case. Uh, for one straightforward reason that Trump's tariffs are really going to start to damage the economy as they go into effect. So consumers are basically saying, things stink, uh, they're very worried about prices going up in the future. They think the job market is getting weaker. And this time around, economists are saying, yeah, that could be the case. We're not seeing it yet in the hard data, but the hard data has a lag, uh, and we just saw, for example, a little tick up in inflation in February. That does not reflect the tariffs that weren't really in effect yet. But it could mean that producers are anticipating the tariffs and they're trying to raise prices ahead of time. And we're most likely just going to see more of that. I mean, one example is cars. Car prices are going to start to go up very soon as long as those 25% import tariffs stay in place. So it could be this time around that consumers are in a better position to predict a downturn in the hard data, which is looking more and more likely.
What do you think we hear next week, Rick? April 2nd, that's when, of course, the White House is expected to announce these new reciprocal tariffs. What do you think we're going to hear?
Well, the market expectation a month ago was that, uh, as you guys have been discussing, Trump was going to, uh, threaten these severe tariffs but end up pulling back. It does not look like that's the case. I mean, Trump has kind of telegraphed that, um, these so-called reciprocal tariffs maybe will be more lenient than we expect. But, but that only comes after we got these auto tariffs that were far more severe than anybody expected. So, uh, I'm wondering when the markets are finally going to give up on the so-called Trump put. When markets are finally going to say, he really means it, he doesn't care if he causes a stock market correction or even a bear market because he's a hard believer in that tariffs for some reason are the right thing to do. So, uh, I do not expect we're going to get a big relief rally here, uh, because, you know, because it hasn't been happening. I mean, investors who have been expecting Trump to back away from tariffs have not been getting it, and I'm not sure there's any reason to think they will.
Tariff man's going to tariff, Rick. Thank you so much. Have a great weekend.
