U.S. Consumer Confidence Rises Slightly Despite Tariff Fears/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. consumer confidence rose modestly in July, suggesting slightly improved sentiment about the economy. The Conference Board’s index increased to 97.2, but ongoing tariff concerns weigh heavily on Americans’ expectations. Economic outlook remains cautious, especially with recession indicators still present.
U.S. Consumer Sentiment + Quick Looks
- Consumer confidence index increased to 97.2 in July, up from 95.2 in June
- Short-term expectations index climbed to 74.4, still below recession-warning threshold of 80
- Current conditions assessment dipped slightly, down 1.5 points to 131.5
- Tariffs remain a major concern for consumers, particularly amid inflation uncertainty
- April marked a low point for confidence, the worst reading since May 2020
- Economists expected a modest rebound, matching July’s actual gain
- Mixed signals from labor market and business activity continue to create uncertainty
- Consumer spending remains a pillar of economic resilience, but inflation lingers
- Trump’s tariffs continue to shape economic perceptions, despite market stabilization
- Recession risk not ruled out, with confidence still fragile in many sectors
Deep Look: U.S. Consumer Confidence Rises Modestly in July, But Tariff Concerns Linger
WASHINGTON (AP) — U.S. consumers grew slightly more optimistic about the economy in July, as the Conference Board’s monthly consumer confidence index rose to 97.2, up from 95.2 in June. But that increase masks deeper anxieties still plaguing American households — particularly over the impact of President Donald Trump’s tariffs, which continue to cloud the country’s economic outlook.
The two-point rise aligned with analysts’ expectations and reflects moderate optimism in certain areas, such as income growth and job opportunities. However, the index measuring short-term expectations — tracking sentiment around future income, business conditions, and employment — rose only 4.5 points to 74.4, a level still well below the 80-point benchmark that typically suggests economic contraction ahead.
“This month’s gain is encouraging,” said Dana Peterson, Chief Economist at The Conference Board, “but it remains clear that uncertainty about trade policies, particularly tariffs, is restraining stronger sentiment.”
Tariff Effects Still Dominate Outlook
One of the key headwinds remains the ongoing economic impact of the tariffs President Trump has imposed on a range of imported goods, including steel, electronics, household appliances, and vehicles. While aimed at strengthening U.S. industries and trade leverage, many consumers have reported rising prices, particularly on large-ticket items.
“Americans are watching prices rise at places like Costco and Walmart,” said Raymond James economist Lisa Walker. “And even if they support the long-term trade goals, short-term cost increases are making them nervous.”
Consumer sentiment hit a multi-year low in April, driven by a sharp increase in public concern about the effects of tariffs on personal finances and household budgets. Although the index has recovered somewhat, economists say the hesitation remains deeply embedded in the data.
Present Conditions: Stable But Slipping
In contrast to expectations, Americans’ perception of their current economic situation weakened slightly, with the index tracking this measure falling 1.5 points to 131.5. That metric still remains relatively high by historical standards but signals growing caution among consumers as prices rise and wage growth slows.
“Consumers are being pulled in two directions,” said Marcus LeClair of ING Research. “On the one hand, unemployment is still low and jobs are available, but on the other, goods are getting more expensive — and that tension is showing up in these numbers.”
Why Confidence Still Matters
Consumer confidence is a crucial indicator of future economic activity, as consumer spending drives roughly 70% of the U.S. economy. When confidence is high, people are more likely to buy homes, cars, appliances, and other goods. When it drops, those big-ticket purchases often get postponed, creating a drag on growth.
That’s why analysts closely watch the expectations subindex, which rose in July but remains below 80 — a level often considered a signal that a recession could be approaching.
“This is a situation where we’re walking a tightrope,” said Bank of America strategist Emily Cho. “The Fed is waiting on inflation data, and consumers are watching prices. If tariffs keep pushing those prices up, it might spook markets and slow down spending.”
What’s Next: Fed, Tariffs, and Inflation
The latest consumer data comes just ahead of a major Federal Reserve policy meeting, where officials are expected to hold interest rates steady despite recent inflationary signals and calls from President Trump to cut rates aggressively.
Trump has defended his trade strategy, saying tariffs are essential for rebuilding U.S. manufacturing and reducing reliance on foreign competitors. But many economists argue that the short-term cost to consumers may outweigh the long-term benefits.
“The impact of tariffs is becoming more visible in sentiment data,” Peterson noted. “That’s something the administration and the Federal Reserve can’t ignore if they want to keep the recovery on track.”
While employment remains strong and GDP growth has held up, the continued wariness among consumers could signal slowing momentum heading into fall, particularly as the tariff timeline expands and global economic uncertainty rises.
Bottom Line
Though consumer confidence improved slightly in July, the data reflects a nation still uncertain about the future. The dual impact of tariffs and inflation has created a persistent undercurrent of doubt, and unless those headwinds ease, confidence may struggle to break into more optimistic territory.
