Data_Note: There's something happening here...

What it is seems pretty clear.

My Data_Note readers, many of whom had to sit through my doleful data narrations at the old 8:40 am meeting, know that one of my favorite mantras is “one month does not a new trend make.” Practically every CEA data memo ended with a similar caveat.

So, when I say I’m seeing something that looks non-blip-ish, I do not say so lightly. And here too, we must be careful not to lean over our skis, as I will also show.

But there’s something negative going on with consumer confidence, sentiment, inflation expectations, and polling responses on economic matters that families care about, particularly prices.

The latest data points come from this AM’s report on consumer confidence from the Conference Board:

• The topline index for February dipped to 98.3, a miss on expectations (102.7), a 6.7% drop, the lowest level since last June 2024 and the biggest percent drop since August 2021, when inflation was 5.2%.

• The index tracking near-term expectations re income, businesses, and jobs fell even faster, down 11.3% in February.

• Short-term (one-year-ahead) inflation expectations popped up from 5.2% to 6%. Stephanie Guichard from the Conference Board attributed the increase to (my bold) “…a mix of factors, including sticky inflation but also the recent jump in prices of key household staples like eggs and the expected impact of tariffs. References to inflation and prices in general continue to rank high in write-in responses…[t]here was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019. Most notably, comments on the current Administration and its policies dominated the responses.”

• As I featured in a recent Data_Note on the other major sentiment survey:

  “Umich consumer sentiment came in even more negatively than expected for February, with overall sentiment down 10% on concerns about tariff-induced inflationary pressures (see figure; also, see Polling section below). Both near and (more-worrisome¹) longer-term inflationary expectations kicked up, with longer-term expectations moving from 3.2% to 3.5%, the largest monthly pop in that variable since May 2021. There was also a hefty “19% plunge in buying conditions for durables, in large part due to fears that tariff-induced price increases are imminent.””

• In that same post, I took readers through a spate of recent polls that give further credence to these confidence/sentiment reports (see here for summary). I particularly noted a Washington Post-Ipsos poll result showing that “about 7 in 10 Americans think tariffs generally increase the price of products in the United States.”

Okay, caveat time. The figure below shows that this survey is spikey and broadly flat over the past couple of years. For this reason, I would normally down-weight the Feb negative spike. Also, as I learned from much direct experience, you have to both listen to what consumers say and look at what they do. Especially around the key variable of aggregate consumer spending, those two have diverged (vibes: big negative; real spending: big positive). But because of all the other evidence, especially what people are telling pollsters about their economic concerns, these data are now firmly on my watchlist.

The Trump administration is playing a dangerous game, especially since we know that their proclivity in the face of such information is almost always to double down. In this case, that would mean a) ignoring these negative data and going ahead with more tariffs, and b) continuing to generate headlines on fights with federal workers, renaming bodies of water, etc., versus even rhetorically addressing consumers economic concerns.

Stay tuned. It’s a bumpy ride that’s only going to get bumpier.