Financial FAQs
“Consumer confidence improved in May after five consecutive months of decline,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “The rebound was already visible before the May 12 US-China trade deal but gained momentum afterwards.”
The rebound in the Conference Board’s Consumer Confidence Index after its five-month plunge reflects how important China is in providing consumer products, and world trade. It also says consumers will have a very bumpy ride in trying to anticipate what lies ahead.
Why not? Trump has made it clear that the China pause in tariff negotiations is only temporary and that some form of higher import taxes on their products is coming. Trump’s ‘shock and awe’ negotiation tactics will eventually slow foreign trade and encourage higher inflation; just not when it will happen.
So what should consumers and investors do? Economic activity will fluctuate as well—buy the lows (i.e., discounts) and hold onto savings when prices jump. It’s what we all did during past stagflationary times.
Yes, it’s further confirmation that stagflation is on the way with more wild market activity as the public and investors attempt to anticipate what Trump will do next. This is probably why survey consumers still believe a recession could happen.
The Conference Board’s Present Situation Index—based on consumers’ assessment of current business and labor market conditions—rose 4.8 points to 135.9. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—surged 17.4 points to 72.8, but remained below the threshold of 80, which typically signals a recession ahead.
The above graph is telling us that confidence is down to the level that last prevailed in 2020 during the COVID-19 pandemic. What was happening then? Almost no foreign trade because supply chains had been shut down from the pandemic and took years to restore.
President Trump is unfortunately causing the same supply disruptions as happened during the pandemic with his shock and awe tactics. Pandemic shutdowns were the major cause of the soaring inflation at the time (Not Biden’s New Deal legislation).
And it’s happening again. California’s Long Beach and San Pedro ports handle most west coast imports and have reported a 45 percent decline in activity while importers wait to learn what Trump may do next.
It’s the unfortunate consequence of One-man rule. Trump is deciding what the tariff rules are, not Congress. Republicans in this case have given him the power, even though he has been exhibiting increasingly erratic behavior.
Are Republicans choosing to ignore what the public may already be seeing? Is there already a coverup, an attempt to hide his declining mental acuity, as Republicans have accused President Biden’s White House of doing?
Let’s hope it doesn’t lead to another recession.
Harlan Green © 2025
Follow Harlan on Twitter: https://twitter.com/HarlanGreen
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