Why U.S. Consumers Are Bracing for Rising Inflation: Insights from CNBC Daily Open

Consumer confidence in the U.S. is at a low not seen since late 2022, as recent data from the University of Michigan shows. In that time, inflation was high at 7.1%. Now, things have improved a bit, with inflation dropping to 2.9% in December and a GDP growth rate of 2.3% in the last quarter of the previous year. Many hoped these trends would point to a healthier economy.

However, current events are causing new worries. President Donald Trump’s tariffs are creating uncertainty, with consumers expecting inflation to rise to 4.9% in the coming year. Treasury Secretary Scott Bessent warned that there’s "no guarantee" we can avoid a recession, adding to the anxious mood.

This uncertainty is also shaking Wall Street. While stocks saw a slight increase recently—a relief for some investors—overall sentiment remains grim. For instance, the S&P 500 lost approximately $5 trillion over three weeks, indicating ongoing instability.

The University of Michigan’s latest consumer sentiment index shows a score of 57.9, significantly down from February. Many respondents cited uncertain policies as a major concern. Joanne Hsu, director of the survey, emphasized the influence of this uncertainty on consumer feelings.

Meanwhile, in other economic news, Klarna, a popular buy now, pay later firm from Sweden, filed for an IPO. They plan to list on the New York Stock Exchange, marking a significant strategy shift that could affect European markets, which have struggled to attract tech IPOs.

Across the pond, the U.K. economy unexpectedly contracted by 0.1% in January, contrary to expectations of growth. The Bank of England is likely to keep interest rates steady at 4.5% in their upcoming meeting.

Looking ahead, February’s U.S. retail sales data—due out soon—could shed light on whether consumer confidence is leading to actual spending changes, as retail CEOs have expressed concerns over consumer behavior.

This turbulent landscape is not isolated. Experts like Dennis Whyte of MIT draw parallels to historical economic shifts, indicating that combining various factors, including recent governmental policies and international competition, can result in unpredictable outcomes. As consumers and investors navigate these complexities, staying informed is more crucial than ever.

For a deeper understanding of consumer behavior during unstable periods, explore surveys by the University of Michigan.

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