Morning Consult economist: Uncertainty erodes consumer confidence

Business Journals

21-04-2025

A new index from Morning Consult and American City Business Journals tracks consumer sentiment in major metro areas. Here's how consumers are feeling, which metros led the way and why an 'odd disconnect' is developing.
The turmoil over tariffs and trade policy is cutting into consumer confidence.
That's according to new data from global decision intelligence company Morning Consult, which is partnering with American City Business Journals on the new Metropolitan Consumer Sentiment Index.
The Metropolitan Consumer Sentiment Index will provide metro-level insights in 46 major metros across the U.S., giving visibility into how consumer confidence is shifting at the local level.
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Morning Consult's survey engine conducts more than 5,000 daily interviews nationwide and uses a stratified sampling model to ensure representation across key demographics within each metropolitan statistical area. That data will power the new MCSI.
Nationally, 27 of the 46 metro areas tracked by the MCSI recorded an index score above 100 in the first quarter, which represents positive sentiments about the economy. Scores declined between the fourth quarter of 2024 and the first quarter of 2025 in 22 of the 46 markets.
The MCSI was tabulated before the Trump administration's tariff announcement on April 2 — and the accompanying turmoil in the stock market — but economists from Morning Consult said the impact of the tariffs was already becoming noticeable at both the national and local level due to prior announcements and expectations of higher tariffs.
The early April announcement only accelerated those trends.
Deni Koenhemsi, head of economic analysis at Morning Consult, said the recent volatility and stock market turbulence sparked a downward trend in consumer sentiment — similar to what was seen in the early days of the pandemic.
"Even if we look at it by small-business owners, you see the downward trajectory (for sentiment), which was definitely buoyant at the beginning of the year. Things changed quite fast," Koenhemsi said during our recent Member-Only Webinar on how to navigate the new tariffs.
At the end of the first quarter, the overall national Index of Consumer Sentiment was 96. By April 8, that had fallen to 94.8. That's down from 101.2 at the start of the year.
Sentiments are strongest in the Sun Belt
Nationally, Sun Belt markets dominated the top of the new index. Metros with the highest MCSI scores in the first quarter were: Birmingham, Alabama (108.8); Houston (108.8); Atlanta (108.7); Miami (108.6); and Nashville, Tennessee (108.3).
At the other end of the spectrum, Portland, Oregon (83.9); Providence, Rhode Island (92.3); Albuquerque, New Mexico (92.4); Boston (92.8); and Wichita, Kansas, (93.9) had the lowest scores for the quarter.
Birmingham and Dayton, Ohio, posted the strongest increases in the first quarter, with both metro's MCSI scores jumping 6.8 points compared to the fourth quarter.
Albany, New York, had the largest decrease in sentiment. Its score fell 8.4 points.
Inside the Metropolitan Consumer Sentiment Index
At the national level, the Morning Consult data showed a paradox in consumer sentiment.
More people are beginning to feel their personal finances are better off now than they were 12 months ago, according to survey data from Morning Consult. About 22% of respondents said in April they felt their financial position had improved over that period, up from 17.7% in October.
That would typically indicate consumers feel their finances are on an upward trajectory, but there's also a growing sentiment among the surveyed group that they will be worse off, not better, in 12 months. Just under 22% of respondents expressed that sentiment in April, up from 15.8% at the start of the fourth quarter.
'That's a really odd disconnect — generally, they're positively correlated with each other,' said John Leer, chief economist with Morning Consult. 'But it captures what's going on right now.'
Inflation was low in the first quarter, and the job market in 2025 has so far proved resilient. But at the same time, consumers are awash with uncertainty around economic policy — tariffs in particular — coming out of the White House.
'There's no world out there where that disconnect can continue indefinitely,' Leer said. 'We'll have to monitor it to see which vision of this story wins out.'
Over a longer-term horizon, the expectation that the economy is getting worse becomes more stark.
About 40% of respondents at the start of the fourth quarter said they expected periods of widespread unemployment or depression in the next five years, according to Morning Consult. By April, that share had risen to 45.9%.
The Trump administration's tariff policy has shifted several times since the start of the year, with several delays and changes to tariff rates in the past three months. As of April 14, the U.S. had imposed a 10% tariff on all imports, with a few exceptions, including a tariff on Chinese imports that skyrocketed in just a handful of days to 145%.
Uncertainty erases consumer sentiment gains since election
Whatever happens with tariffs, the whiplash consumers have experienced in the first few months of President Trump's administration will have a lasting impact.
Consumers have learned how quickly things can change, they've seen their retirement portfolios shed value in a single day as the stock market plunged only to begin climbing the next, and uncertainty is weighing heavily on them, Leer said.
Broadly, Morning Consult's national consumer sentiment index has fallen below where it sat in November, when Trump was elected, erasing an increase that followed the election. There's a stark divide between how Republicans and Democrats have viewed the economy, but Republican sentiment generally improved more quickly following the election than Democrat sentiment fell, Leer said.
'There was a sense out there that the country was giving the president a chance to see what his economic policies would mean,' Leer said. 'We're now just below the level where Donald Trump inherited the economy in terms of consumer sentiment. So that grace period is over.'
The five-day moving average of Morning Consult's Index of Consumer Sentiment reached 98.8 the week of Nov. 4. It peaked at 103.3 on Jan. 20 — the date of Trump's inauguration and the highest it's been since the start of the Covid-19 pandemic — but has since plunged to 94.2.
There's a similar dynamic at play among financial executives. Those included in the latest AICPA & CIMA Economic Outlook Survey reported less confidence in the economy than they did in the fourth quarter. In that survey, 47% said they were confident in the U.S. economy, down from 67% in the prior quarter. That survey ended in late February, much earlier than the announcement of several new tariffs.
Broad economic uncertainty also has had an effect beyond sentiment. John Scannapieco, partner at Womble Bond Dickinson, said he has had international clients who were planning direct investment in the U.S. step back from those plans. He shared those insights during an April 10 panel by The Business Journals on tactics for business owners to navigate tariffs.
'They've paused over not just the tariffs, but also general policy instability. They're really concerned about that,' Scannapieco said. 'It's been one project out of the Middle East and two out of Asia that have put the brakes on.'
Older Americans are less optimistic
In the Morning Consult survey, respondents ages 65 and older were the most likely to have a negative outlook on their personal finances, with 33.8% believing they would be worse off in the next 12 months, as of April.
That age group is more exposed to near-term threats to their retirement, Leer said.
'You see the older folks being hyper-concerned about inflation. They're on fixed incomes, so inflation directly erodes their purchasing power,' Leer said.
Morning Consult found in a different report about 70% of survey respondents expected companies to pass at least some of the cost of tariffs on to consumers.
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