The U.S. consumer hasn’t felt so glum about the economy since November 2022, according to a survey by the University of Michigan. That’s when annual inflation was at 7.1% and Federal Reserve Chair Jerome Powell acknowledged that the chances of a soft landing — where inflation is tamed without the economy slipping into recession — has narrowed.
With U.S. inflation at 2.9% in December and gross domestic product expanding an annualized 2.3% during the fourth quarter last year, it seemed like the Fed was, in fact, going to steer the economy safely down the landing strip.
But turbulence, in the form of President Donald Trump’s tariffs, is rocking the plane in 2025. Consumers now expect one-year inflation to jump to 4.9%, the same survey showed. Adding to woes, U.S. Treasury Secretary Scott Bessent said Sunday there are “no guarantees” there won’t be a recession.
Stocks bounced on Friday, but that was probably because investors were relieved by the lack of tariff news than optimism about the markets. Like on Main Street, the sentiment in Wall Street is decidedly downbeat.
