Washington, United States — Consumer confidence in the United States took an unexpected hit in December, as concerns over potential tariff policies ahead of Donald Trump’s inauguration weighed on public sentiment.
The president-elect, who campaigned on imposing significant tariffs on imported goods, has faced criticism from economists who warn of potential increases in everyday costs. In response, Trump has defended his stance, claiming tariffs would ultimately benefit the U.S. economy.
“Right now, our country is losing to everyone,” Trump said earlier this month from his residence in Florida. “Tariffs, when applied correctly, will make our country stronger and wealthier.”
Confidence Index Declines
The Conference Board reported Monday that its consumer confidence index dropped to 104.7 in December, down from a revised 112.8 in November. This figure was significantly lower than the market’s anticipated 113.5, marking a notable shift in public sentiment.
“The rebound in consumer confidence we saw earlier this year didn’t hold in December,” said Dana Peterson, chief economist at The Conference Board. “The index has returned to the midpoint of its two-year range, driven by weaker assessments of both current conditions and future expectations.”
Peterson highlighted that the expectations component of the index experienced the most significant decline, suggesting growing uncertainty about the economic outlook.
Tariffs Influence Sentiment
The timing of the dip coincides with heightened political discourse around tariffs. According to The Conference Board, nearly half (46 percent) of survey respondents believed that tariffs would increase the cost of living, while 21 percent anticipated that tariffs might lead to job creation.
“Politics is playing a major role in shaping consumer confidence this holiday season,” said Oren Klachkin, a financial markets economist at Nationwide, in a note to clients. “While this report ends 2024 on a sour note, it likely exaggerates any real decline in sentiment.”
Broader Implications
This report comes just weeks before President Joe Biden transitions out of office, handing over leadership to Trump. The shift in consumer confidence reflects apprehension about the incoming administration’s policies, particularly as tariffs and their economic implications become a central focus.
As 2024 draws to a close, consumer sentiment will be closely watched as a barometer for potential economic changes under the new administration.
