According to the latest data from The Conference Board, the consumer confidence index plummeted by 7.9 points to 86.0 in April, marking the lowest level since the peak of the COVID-19 pandemic in May 2020. Several authoritative media outlets, including Jin10 Data, pointed out that the Trump administration's aggressive tariff policies and the inflation panic they triggered are reshaping the fundamentals of the U.S. economy. Behind the collapse of consumer confidence is a collective anxiety about future uncertainties.

Collapse of Consumer Confidence: Tariff Concerns as the Main Cause

The preliminary consumer confidence index from the University of Michigan for April is equally alarming, standing at only 50.8, close to the second-lowest historical level, just above 50.0 in June 2022. The survey indicates that from March 25 to April 8, public concern over Trump's "Liberation Day Tariff" policy surged sharply, leading to a year-on-year decline of 32.4% in the confidence index. Stephanie Guichard, a senior economist at The Conference Board, stated, "Consumer confidence has fallen to its lowest level since the outbreak of the pandemic, and the uncertainty surrounding tariff policies has worsened households' expectations for future income and prices." Specifically, consumers' assessment of the current economic situation (current conditions index) fell by 0.9 points to 133.5, while expectations for the next six months (expectations index) plummeted to a near-term low, indicating extreme pessimism about the short-term economic outlook.

The impact of tariff policies has permeated daily life. The survey shows that over 60% of respondents are concerned that tariffs will drive up the prices of goods, especially imported consumer products and raw materials, which will directly erode household purchasing power. Meanwhile, inflation expectations have soared to the highest level since the early 1980s, with households generally expecting prices to rise by more than 3.6% in the next 12 months. This expectation further suppresses consumption willingness, with some households already beginning to cut back on non-essential spending to cope with potential economic shocks.

Surge in Imports and GDP Concerns: Signs of Economic Slowdown Emerge

The U.S. first-quarter GDP data, set to be released tomorrow (May 1, 2025), is highly anticipated, with the market widely expecting a significant slowdown in economic growth. The Wall Street Journal cited a survey of 64 top economists, indicating that the inflation-adjusted GDP growth rate for the fourth quarter of 2025 is expected to be only 0.8%, nearly halving from the 2% forecast at the beginning of the year, while the probability of recession has surged from 22% to 45%. Analysts point out that companies have accelerated imports to avoid tariff costs, leading to an expanded trade deficit and temporarily raising inventory levels, but this does not mask the essence of weak consumption.

"The competition among companies to import is a panic response to the implementation of tariff policies, but this is only a short-term behavior," stated a report from the Boston Federal Reserve Bank, noting that comprehensive tariffs will raise U.S. inflation by 0.8 percentage points, and combined with supply chain tensions, may further weaken the competitiveness of the manufacturing and retail sectors. The slowdown in consumer spending is particularly concerning, as personal consumption expenditures (PCE), a pillar of the U.S. economy, are expected to decline significantly, partly due to high inflation and tariff expectations squeezing household budgets.

Market and Policy Game: The Fed's Dilemma

The inflationary pressures caused by tariffs have put the Federal Reserve's monetary policy in a dilemma. Austan Goolsbee, president of the Chicago Federal Reserve, recently stated that although the economy remains in a state of full employment and robust growth, the uncertainty surrounding tariffs may force the Fed to slow down its interest rate cuts. The market is worried that if inflation remains high due to tariffs, the Fed may be forced to maintain high interest rates or even raise them, which would further suppress investment and consumption, increasing the risk of recession.

At the same time, the stock and bond markets have reacted to the tariff policies. Since the escalation of the trade war on April 2, there has been a wave of sell-offs in the U.S. stock market, and bond yields have risen, reflecting investors' dual concerns about economic growth and inflation. The cryptocurrency market has also been affected, with major assets like Bitcoin experiencing significant pullbacks in mid-April, as investor sentiment is weighed down by global economic uncertainties triggered by tariffs.

Insights from the Crypto Circle: Safe-Haven Demand and Long-Term Opportunities

For crypto investors, the current situation presents both challenges and opportunities. The sharp decline in consumer confidence and economic slowdown may depress risk asset prices in the short term, but rising inflation expectations could reignite demand for crypto assets as a safe haven. Bitcoin's status as "digital gold" may regain favor in a high-inflation environment, while decentralized finance (DeFi) platforms may attract more capital due to uncertainties in the traditional financial system. However, investors need to be cautious of the impact of the Fed's tightening policies on liquidity, as a high-interest-rate environment may pressure high-risk assets.

This article represents the author's personal views and does not reflect the position or views of this platform. This article is for informational sharing only and does not constitute any investment advice to anyone.

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