WASHINGTON, D.C.: U.S. consumer confidence continued to drop in 2025, hitting its lowest level in 12 years as more Americans worry about tariffs and inflation.

The Conference Board reported that its confidence index fell to 92.9 in March, marking the fourth consecutive monthly decline. Analysts had expected a slightly higher reading of 94.5. The index measuring Americans' expectations for their income, jobs, and the economy dropped sharply to 65.2, a level that can indicate a possible recession.

"People's optimism about their future income has mostly disappeared, showing that concerns about the economy and job market are spreading," said Stephanie Guichard, a senior economist at The Conference Board.

President Donald Trump's administration has downplayed these concerns, arguing that confidence levels don't necessarily reflect actual economic conditions. This is similar to how officials in former President Joe Biden's administration reacted when high inflation affected consumer confidence but did not slow economic growth.

Despite government reassurances, major retailers see shifts in consumer behavior. Walmart, which benefits from bargain-seeking shoppers, recently lowered its profit forecast. Target also reported lower sales and profits, partly due to the implementation of new tariffs. Other retailers, such as Macy's, Best Buy, and Dollar General, have expressed caution about the economic outlook for 2025.

The survey found that fewer people plan to buy homes and cars, though interest in big-ticket items like appliances increased—possibly as people try to purchase before tariffs raise prices.

While inflation has decreased from post-pandemic highs, it remains above the Federal Reserve's two percent target. With new tariffs on imports adding to costs, Americans are growing more hesitant to spend.

Consumer spending, which accounts for approximately two-thirds of the U.S. economy, is closely monitored by economists for indications of future economic trends.