By Samantha Barnes, International Banker
On July 29, The Conference Board published its monthly Consumer Confidence Index reading for July, noting that US consumer confidence had inched up in July by two points to 97.2 (1985=100) from 95.2 in June. The board’s Present Situation Index—based on consumers’ assessments of current business and labour-market conditions—fell by 1.5 points to 131.5, while the Expectations Index—based on consumers’ short-term outlooks for income, business and labour-market conditions—rose 4.5 points to 74.4. But with the Expectations Index reading remaining well below the threshold of 80 for the sixth consecutive month, as the impacts of tariffs continue to subdue the US economic outlook, consumers remain wary that a recession could transpire in the coming months.
“Consumer confidence has stabilized since May, rebounding from April’s plunge, but remains below last year’s heady levels,” acknowledged Stephanie Guichard, senior economist of global indicators at The Conference Board, a non-partisan, non-profit entity focussed on business insights. “In July, pessimism about the future receded somewhat, leading to a slight improvement in overall confidence. All three components of the Expectations Index improved, with consumers feeling less pessimistic about future business conditions and employment, and more optimistic about future income.”
Guichard also confirmed, however, that according to consumers’ written-in responses, the impact of US tariffs remained top of mind in July, mostly associated with concerns that they would lead to higher prices. What’s more, consumers’ appraisals of job availability in July weakened for the seventh consecutive month, reaching its lowest level since March 2021, with 18.9 percent of consumers indicating that job openings were difficult to find during the month, much higher than the 14.5 percent recorded in January.
The drastic tariff regime implemented by US President Donald Trump continues to be front and centre in the minds of US consumers. In April, consumer confidence in the economy dropped to its lowest level since May 2020, as concerns mounted in the weeks following April 2’s Liberation Day, when Trump announced sweeping protectionist trade measures against much of the world. In the ensuing days and weeks, with the president massively hiking tariff rates on imports of Chinese goods, as well as goods imported from many other trading partners, their anxieties surrounding higher domestic prices weighed heavily on US consumers.
The Conference Board’s Consumer Confidence Index for April plunged to 86, a hefty 7.9 points lower than its previous reading and its lowest level in nearly five years. The Expectations Index, which measures how the surveyed respondents assess the ensuing six months for income, business and employment, crashed by 12.5 points from March’s reading to 54.4, its lowest level since October 2011, suggesting that recession indicators were flashing red by that point.
“The three expectation components—business conditions, employment prospects, and future income—all deteriorated sharply, reflecting pervasive pessimism about the future,” Guichard noted at the time, adding that the confidence surveys overall were at “levels not seen since the onset of the Covid pandemic”. The percentage of respondents expecting employment to decline over the next six months also hit 32.1 percent in April, which was “nearly as high as in April 2009, in the middle of the Great Recession,” Guichard added.
With the Expectations Index rising since then and hitting 74.4 in July—but crucially remaining well below the board’s designated threshold of 80—consumer expectations of a recession materialising in due course were less intense than in April, albeit still palpable. Given that tariffs may continue to weigh further on US prices over the coming months and with uncertainty over Trump’s policies continuing to cloud the US economic outlook, consumers remain understandably wary of their economic prospects going forward.
Indeed, the underwhelming jobs reports of recent months highlight the sheer precariousness of the US economic position. “I always caution [people] not to make too much of a single report or [a] single month’s data, but I think we can look at the July report and say it was unambiguously bad news,” economist Dean Baker of the Center for Economic and Policy Research (CEPR) acknowledged in an August 2 report. “The job growth number for the month wasn’t bad at 73,000, but with the sharp downward revisions to the prior two months’ data, the average for the last three months was just 35,000. That is bad.”
Baker also observed that July’s mediocre jobs report was “consistent” with other US economic data reported in recent weeks. “GDP grew at just a 1.2 percent annual rate in the first half of the year, with consumption growing at just a 0.9 percent rate. It grew 3.4 percent in 2024,” the economist added. “Inflation is edging higher due to Trump’s tariffs. Higher inflation coupled with slower wage and employment growth will mean slower consumption growth. That is not a good story for the economy.”
On the business front, meanwhile, sentiment has turned more positive in recent months after Trump’s April tariff announcements sent confidence among business owners plummeting. The CNBC|SurveyMonkey Small Business Confidence Index for the second quarter (Q2), for instance, found that optimism about the state of the economy had sharply declined, with just 30 percent of small-business owners saying that the economy was “excellent” or “good”, down from 39 percent in the previous quarter.
“Most small business owners (70 percent) believe the country is heading towards a recession. Two in three (66 percent) small business owners have been, or expect to be, impacted by tariffs, and three in five (59 percent) express concern about the impact of tariffs on their business,” according to the survey, which aims to provide a representative sample of small-business community sentiment in the US. The online poll was conducted by SurveyMonkey from April 21 to 25 among a national sample of 2,257 self-identified small-business owners aged 18 and up and was published on May 8. “More than half (60 percent) of small business owners are stressed about their business’ finances. Inflation remains the top concern for small business owners, while anxiety over tariffs intensify.”
However, business confidence showed a clear uptick in the third-quarter (Q3) edition of the survey, which was conducted by SurveyMonkey from July 7 to 10, 2025, among a national sample of 1,900 self-identified small-business owners and was published on July 22. The survey found that optimism about the state of the economy had rebounded, with nearly half of small-business owners (46 percent) saying that the economy was “excellent” or “good”, up from 30 percent the previous quarter. Part of that renewed optimism can be attributed to the tariffs’ impacts on businesses not being as burdensome as was initially anticipated.
“Fewer small business owners are concerned about the impact of President Trump’s tariffs on their businesses, down from 59 percent in Q2 to 54 percent this quarter,” the Q3 Survey concluded. “Fewer are also bracing for their impact: 59 percent of small business owners expect Donald Trump’s tariffs to impact their business now (28 percent) or in the future (31 percent), down from 66 percent the previous quarter. Fears over tariffs as their biggest risk also decline[d] from 17 percent in Q2 to 10 percent this quarter.”
The Q3 index also confirmed that fears over the extent of US inflation had also moderated from Q2 levels, with 66 percent expecting the prices of goods to rise, down from 72 percent. A moderate 32 percent believed inflation had already peaked, up from 27 percent in Q2. Nonetheless, inflation remained small businesses’ biggest concern, with one in five (22 percent) citing rising prices as the biggest risk to their businesses.
Indeed, with Trump informing a number of US trading partners in late July that tariff rates ranging from 10 percent to 41 percent on imports would kick in on August 7, the Budget Lab at Yale University estimated that the average overall US tariff rate had jumped to 18.3 percent, the highest since 1934, from between 2 percent and 3 percent before Trump returned to the White House in January. Given that Trump’s tariffs have yet to fully filter through the economy, therefore, and with further price rises likely to be observed in the coming months, business owners’ concerns about rising inflation suggest that tariffs will continue to weigh considerably on their outlooks and may do so for some time yet.