US consumers lose confidence over trade tariffs

Fears of tariff wars have pushed consumer confidence to a four-year low. The Consumer Confidence Index fell 7.2 points to 92.9 in March, the lowest since March 2021. Expectations fell to a 12-year low of 65.2. The Conference Board notes that the 80 level is typically seen as a recession threshold. According to this metric, America is heading into or already in a recession.

It's interesting how the indicator, which spiked after Trump's election victory and is now falling as the president-elect fulfils his campaign promises, has evolved.

Falling consumer confidence is a strong signal for the government to soften its stance. This could apply to both Fed rate cuts and Trump's escalation of tariff wars. From this perspective, weak reading could create a temporary positive for the stocks, suggesting that now is a good opportunity to build positions after a pullback. But that's debatable, as much depends on whether corporate America has been dealt a more serious blow.

A much clearer signal for the dollar is weak consumer confidence, as cooling demand reduces inflationary pressures, creating room for the Fed to cut interest rates. The Dollar Index has been gaining ground, having formed a rally last Wednesday after another FOMC meeting. However, further gains are in doubt due to weak data.