Americans clearly voted against the Joe Biden economy in 2024, with inflation and the perception of Democratic ineptitude clinching Donald Trump’s presidential win. Consumer confidence jumped up after the election, as if economic salvation was at hand.
Just one month into Trump’s presidency, however, Americans are gloomier than they were at the end of Biden’s. The Conference Board’s consumer confidence index has sunk to the lowest level since last June. “Pessimism about the future returned” is how the Conference Board explained the shift. The index is now near the depressed levels of 2022, when inflation was raging, and the expectations index is near levels often associated with recession.
The investor class isn’t feeling any better. The monthly survey by the American Association of Individual Investors shows bullish sentiment to be at the lowest level since March of 2023. Since Trump took office, the S&P 500 index has dipped by about 1%, mainly because Trump’s tariff threats — and his attempt to dismantle the federal government — threaten growth and profits.
Semafor sarcastically highlighted the “American exceptionalism” trade by pointing out that the stock markets in Hong Kong, Europe, and Mexico have handily outperformed US stocks since Trump took office. In a Feb. 27 video briefing, Tom Lee, co-founder of investing firm Fundstrat, said, “Clients have begun talking about, what exactly is the White House’s goal? Do they want stock prices to fall?”
Trump has a mystical belief in his own powers, and he continues to insist that his unique blend of protectionism, government shrinkage, deregulation, and tax cuts will produce a new “golden age.”
“Since the election, the CONFIDENCE in our nation…the CONFIDENCE in business, the CONFIDENCE in our Country has reached an ALL-TIME HIGH,” Trump posted on social media on Feb. 26. That was one day after the Conference Board survey showed that in the real world, “CONFIDENCE” had fallen three months in a row.
Can Trump convince Americans that they’re more confident than they are, or that the economy is better than they think it is?
Biden certainly tried. He repeatedly gave speeches touting record job growth, the resurgence of unions and declining inflation, while his dismal approval ratings remained stuck below 40%. After Vice President Kamala Harris replaced Biden as the Democratic candidate last summer, she obviously failed to persuade voters to stick with the Democratic plan.
Trump may face an even tougher sell now because there are new signs of cracks in the economy. Claims for unemployment insurance, for instance, jumped in the most recent week. That could be a blip, but it could also be the start of a rising trend in unemployment, with Trump’s federal layoffs one factor.
There’s a sudden barrage of other worrying signs.
Consumer spending dropped in January, defying expectations of a modest gain. Some economists now think that pullback could lead to shrinking GDP in the first quarter. The Federal Reserve Bank of Atlanta’s GDPNow tool currently forecasts that GDP will decline by 1.5% in the first quarter, which would be the sharpest downturn since the COVID recession in 2020. In a Feb. 28 analysis headlined “Trumpcession?” Capital Economics said it is now forecasting a 1% decline in first quarter GDP.
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The latest Kansas City Federal Reserve manufacturing survey found a notable decline in employment levels and new concerns about tariffs damaging profitability. Torsten Sløk, chief economist at private-equity firm Apollo, the owner of Yahoo Finance, noted in a Feb. 28 email dispatch that “in recent weeks, the probability of a recession over the next 12 months has ticked higher.”
If there’s a symbol of the nation’s eggonomic woes under Trump so far, it’s egg prices. An avian flu epidemic has driven them up 53% during the last year, with some stores running short and charging $10 or more for a dozen. The Agriculture Dept. expects egg prices to soar by another 41% this year. Trump has said little, though the Ag Department did recently announce a plan to deal with the problem.
Amid all this, Trump’s reputation for handling the economy is beginning to sour.
During most of Trump’s first term, his approval rating on the economy was higher than his overall approval rating. But not now. February polls by Ipsos and Quinnipiac show that Trump’s disapproval ratings on the economy are higher than his approval ratings, with his overall approval dropping to the mid-40% range.
“Flashing yellow lights on the economy should worry Republicans,” the Cook Political Report warned on Feb. 27. “Trump’s continued threats of tariffs [are] taking a toll on consumer sentiment.”
Trump could turn this around by scaling back his tariff threats, as one example. What is he waiting for? One lesson of Biden’s presidency is that once voters lose faith in the president, it can be nearly impossible to regain it. Trump’s approval rating is already falling faster than Biden’s did at the start of his presidency, and that’s before most of Trump’s threatened tariffs have gone into effect.
If Trump really is better for the economy, now would be a good time to prove it.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.
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