Consumer Confidence Continues to Weaken as Expectations Hit 12-Year Low

Consumer confidence waned for a fourth consecutive month in March, and by more than economists projected, as expectations plunged to a 12-year low amid economic uncertainty, the Conference Board reported Tuesday.

The consumer confidence index fell by 7.2 points to 92.9 this month. The consensus in a Bloomberg survey was for a 94 level.

The expectations component slid 9.6 points to 65.2, its lowest point in 12 years and well below the 80 threshold that signals an upcoming recession. The present situation measure decreased 3.6 points to 134.5 this month.

"Consumers' expectations were especially gloomy, with pessimism about future business conditions deepening and confidence about future employment prospects falling to a 12-year low," Stephanie Guichard, senior economist of global indicators at the Conference Board, said.

Average 12-month inflation expectations increased to 6.2% this month from 5.8% in February. "Consumers remained concerned about high prices for key household staples like eggs and the impact of tariffs," according to Guichard.

US President Donald Trump said Monday that he may give "a lot of countries" breaks on planned reciprocal tariffs, which are expected to go into effect April 2, according to multiple media outlets. The White House will soon announce duties targeting automobiles and pharmaceuticals, Trump reportedly said.

Consumer optimism about future income "largely vanished," reflecting concerns about the economy and labor market, Guichard said.

The Bureau of Economic Analysis is scheduled to release its personal income and outlays report for February on Friday. The report includes the personal consumption expenditure core price index, which is the Federal Reserve's preferred inflation metric.

The Toronto Stock Exchange is up 65 points with miners, up 1.6%, and healthcare, up 0.8%, the biggest gainer. Energy, up 0.7%, is the third biggest gainer.

Oil prices rose for a fifth-straight session early on Tuesday on supply concerns after U.S. President Donald Trump threatened to impose 25% tariffs on U.S. imports from countries that import oil from Venezuela. Gold traded at a fresh record high as the dollar fell and safe-haven buying continues amid continuing tariff threats from U.S. President Donald Trump.

Also, natural gas futures rose, continuing to trade in a tight range amid weak demand as mild spring temperatures cut the call on supply.

On tariffs, National Bank in its Monthly Economic Monitor for March/April 2025 published late Monday said Canada is "more than ever caught between a rock and a hard place, tensions running high with its main trading partner, whose protectionist bent is now undeniable". But National still hold out some hope the U.S. administration will recognize Canada as a trading partner of choice and grant it preferential status.

"This current uncertainty is unfortunate," National said in a summary of the note, "as the conditions seemed ripe for a soft landing for the economy, with the central bank having been able to cut its policy rate by 225 basis points since June 2024. Indeed, the economic recovery has recently exceeded economists' expectations, with the Citi Economic Surprise Index reaching its highest level in almost three years."

But National added the upturn is likely to be short-lived, if consumer confidence level is anything to go by, which was at a record low in February.

National Bank maintains GDP growth of just 1.2% in 2025. It said "a better starting point than previously estimated is offset by a significant weakening of the economy in the second and third quarters." As a result, the unemployment rate is expected to rise in the 7.0% to 7.5% range over the next few months (6.6% in February), it added.

Meanwhile, escalating U.S. tariffs and Canadian retaliatory duties could raise costs on items from aircraft components to engine repairs, according to aerospace trade groups in Canada, as a fresh round of the U.S.-led trade war looms, Reuters is reporting.

Reuters noted U.S. President Trump's administration is set to enact reciprocal tariffs on trading partners on April 2, widening a dispute that has already slapped 25% duties on steel and aluminum imports to the U.S., sparking retaliation from Canada. While reports suggest some sector-specific goods would be excluded, counterstrikes are already being weighed, with Canada consulting domestic industries on proposed retaliatory tariffs on $125 billion of U.S. goods. Melanie Lussier, president of the trade group Aero Montreal, said Canada's proposed counter tariffs cover certain U.S.-made items like sensors that would be difficult to source elsewhere, since parts must be certified to meet safety requirements. Aerospace companies are set to discuss the prospect of being squeezed by duties from both countries at an industry supply chain summit on Tuesday in Montreal.

In other stock specific news, the Japanese parent company of 7-Eleven says Alimentation Couche-Tard is understating the antitrust risk related to its takeover offer for the company, The Canadian Press is reporting on Tuesday. In a pair of documents, Seven & i Holdings Co. Ltd. says the proposal is a transformational cross-border acquisition involving significant regulatory hurdles unlike other deals done by the Quebec-based convenience store operator. The Japanese company says it is working with Couche-Tard to evaluate potential divestitures to increase the likelihood of satisfying U.S. antitrust regulators and any potential court challenge. However, it says it will not enter into a transaction with no clear path to closing that could leave the company in a "value destructive limbo" for multiple years.

The Toronto Stock Exchange is up 65 points with miners, up 1.6%, and healthcare, up 0.8%, the biggest gainer. Energy, up 0.7%, is the third biggest gainer.

Oil prices rose for a fifth-straight session early on Tuesday on supply concerns after U.S. President Donald Trump threatened to impose 25% tariffs on U.S. imports from countries that import oil from Venezuela. Gold traded at a fresh record high as the dollar fell and safe-haven buying continues amid continuing tariff threats from U.S. President Donald Trump.

Also, natural gas futures rose, continuing to trade in a tight range amid weak demand as mild spring temperatures cut the call on supply.

On tariffs, National Bank in its Monthly Economic Monitor for March/April 2025 published late Monday said Canada is "more than ever caught between a rock and a hard place, tensions running high with its main trading partner, whose protectionist bent is now undeniable". But National still hold out some hope the U.S. administration will recognize Canada as a trading partner of choice and grant it preferential status.

"This current uncertainty is unfortunate," National said in a summary of the note, "as the conditions seemed ripe for a soft landing for the economy, with the central bank having been able to cut its policy rate by 225 basis points since June 2024. Indeed, the economic recovery has recently exceeded economists' expectations, with the Citi Economic Surprise Index reaching its highest level in almost three years."

But National added the upturn is likely to be short-lived, if consumer confidence level is anything to go by, which was at a record low in February.

National Bank maintains GDP growth of just 1.2% in 2025. It said "a better starting point than previously estimated is offset by a significant weakening of the economy in the second and third quarters." As a result, the unemployment rate is expected to rise in the 7.0% to 7.5% range over the next few months (6.6% in February), it added.

Meanwhile, escalating U.S. tariffs and Canadian retaliatory duties could raise costs on items from aircraft components to engine repairs, according to aerospace trade groups in Canada, as a fresh round of the U.S.-led trade war looms, Reuters is reporting.

Reuters noted U.S. President Trump's administration is set to enact reciprocal tariffs on trading partners on April 2, widening a dispute that has already slapped 25% duties on steel and aluminum imports to the U.S., sparking retaliation from Canada. While reports suggest some sector-specific goods would be excluded, counterstrikes are already being weighed, with Canada consulting domestic industries on proposed retaliatory tariffs on $125 billion of U.S. goods. Melanie Lussier, president of the trade group Aero Montreal, said Canada's proposed counter tariffs cover certain U.S.-made items like sensors that would be difficult to source elsewhere, since parts must be certified to meet safety requirements. Aerospace companies are set to discuss the prospect of being squeezed by duties from both countries at an industry supply chain summit on Tuesday in Montreal.

In other stock specific news, the Japanese parent company of 7-Eleven says Alimentation Couche-Tard is understating the antitrust risk related to its takeover offer for the company, The Canadian Press is reporting on Tuesday. In a pair of documents, Seven & i Holdings Co. Ltd. says the proposal is a transformational cross-border acquisition involving significant regulatory hurdles unlike other deals done by the Quebec-based convenience store operator. The Japanese company says it is working with Couche-Tard to evaluate potential divestitures to increase the likelihood of satisfying U.S. antitrust regulators and any potential court challenge. However, it says it will not enter into a transaction with no clear path to closing that could leave the company in a "value destructive limbo" for multiple years.

The STOXX 50 gained 0.7% to 5,450 and the broader STOXX 600 was up 0.6%, as investors digested U.S. trade policy updates and stronger German business confidence.

President Trump indicated that not all planned tariffs set for April 2 would take effect, with potential exemptions for some countries.

However, he reaffirmed plans for new tariffs on autos, pharmaceuticals, and nations purchasing Venezuelan crude.

Meanwhile, Germany’s Ifo Business Climate index climbed to an eight-month high in March, bolstered by a historic debt agreement.

Elsewhere, Ukraine and Russia agreed to a Black Sea ceasefire following separate talks with U.S. officials in Saudi Arabia.

In corporate news, insurer Baloise surged 4% after reporting a 60.6% jump in 2024 profits, while logistics giant Kuehne und Nagel fell 4% after warning of weaker full-year operating profit and retailer Kingfisher plunged 14% after announcing a 7% drop in annual profit.

Treasury yields lose momentum and join falling dollar indexes as U.S. data come in the weak side, keep recession fears alive. New home sales increased less than expected in February, while the Richmond Fed business activity survey disappointed with a negative 4 in March, compared to a positive 6 in February. The Conference Board consumer confidence index falls to 92.9 from 98.3, while economists in a WSJ survey forecast 93.5. The WSJ Dollar Index is down 0.3%, while Treasury yields give up early gains and are now lower than yesterday. The 10-year is at 4.317% and the two-year at 4.016%. (paulo.trevisani@wsj.com; @ptrevisani)

By Matt Grossman

A key consumer survey showed a fall in household sentiment in March, adding to evidence that people are taking a more negative view of the economy.

The Conference Board's monthly survey showed that forward-looking expectations for income, business and labor-market conditions dropped to the lowest level in 12 years, hitting an index level of 65.2. Levels below 80 often signal a recession, the Conference Board said.

Meanwhile, the survey's index showing consumers' view of the current situation fell to 92.9, down 7.2 points from a month earlier, marking the fourth straight month of declines. Economists polled by The Wall Street Journal had expected the index to land at 93.5 in March.

Views of the labor market improved slightly. In March, 33.6% of consumers said jobs were plentiful, unchanged from a month earlier, while 15.7% said they were hard to get. In February, 16% of consumers had said jobs were hard to get.

Write-in responses to the survey "showed that inflation is still a major concern for consumers and that worries about the impact of trade policies and tariffs in particular are on the rise," the Conference Board said.

Analysts have been keeping a close eye on consumer surveys because of mounting evidence of a gloomy mood that could presage a real economic slowdown. In surveys of families and businesses alike in recent weeks, new tariffs are emerging as a central concern. But so far, there's been scant sign of a slowdown in backward-looking data such as the unemployment rate and GDP figures that show what has actually happened in the economy.

"In a self-fulfilling process of sentiment and economic activity, you can think your way into a recession," said Jackson Garton, chief investment officer at Makena Capital Management, a Menlo Park, Calif. investment firm. "But sentiment can shift the other way quickly, too."

Another closely watched consumer survey, run by the University of Michigan, has fallen precipitously, declining by 27% over the year through mid-March. The latest figures from the Michigan survey are due on Friday.

Earlier Tuesday, a Philadelphia Fed survey of non-manufacturing companies in the reserve bank's mid-Atlantic district showed sharply lower business activity in March.

More data due from the Commerce Department on Friday will give an update on Americans' income and spending through February.

Write to Matt Grossman at matt.grossman@wsj.com