Confidence among American consumers fell sharply in February, hitting a 29-month low, while long-run inflation expectations recorded their biggest monthly jump in 32 years, according to the latest University of Michigan consumer sentiment survey.

U.S. households are bracing for some uncertainty—possibly turbulence—as tariffs and other policies take effect, and as government spending shifts to the private sector, comments Epoch Times.

The University of Michigan’s survey showed sentiment plunging 11 percent last month to a preliminary reading of 57.9, down from 64.7 in January and the lowest level since November 2022. The index has now dropped 22 percent since December, when post-election enthusiasm over President Donald Trump’s pro-business policies sent confidence soaring.

Inflation expectations are also rising. Long-run inflation projections climbed from 3.5 percent in January to 3.9 percent in February—the largest month-over-month increase since 1993. Short-term expectations rose as well, with year-ahead inflation forecasts jumping from 4.3 percent to 4.9 percent, marking the highest reading in 29 months and the third consecutive month of significant increases.

Despite these declines, the data suggest consumers are more concerned about the future than the present, as job market conditions and broader economic indicators remain relatively strong.

President Trump has dismissed concerns about a downturn. He told reporters on March 11 that he does not believe a recession is coming “at all” and said that the country is “going to boom.”

Inflation expectations are also rising. Long-run inflation projections climbed from 3.5 percent in January to 3.9 percent in February—the largest month-over-month increase since 1993. Short-term expectations rose as well, with year-ahead inflation forecasts jumping from 4.3 percent to 4.9 percent, marking the highest reading in 29 months and the third consecutive month of significant increases.

Despite these declines, the data suggest consumers are more concerned about the future than the present, as job market conditions and broader economic indicators remain relatively strong.

Trump has dismissed concerns about a downturn. He told reporters on March 11 that he does not believe a recession is coming “at all” and said that the country is “going to boom.”

Some analysts believe consumer anxiety may be overstated. Jamie Cox, managing partner at Harris Financial Group, downplayed the significance of the survey’s steep decline.

“Extreme readings are more noise than signal,” Cox stated. However, he noted that the prospect of fiscal tightening could be unsettling: “I’m pretty sure people won’t like austerity—and these readings may very well reflect what people see coming. Free money has a price, and it’s no fun when it ends.”

Commerce Secretary Howard Lutnick has called Trump’s economic approach “the most important thing America has ever had.” He suggested that even if a brief recession occurs, it will be “worth it.”

“The only reason there could possibly be a recession is because of the Biden nonsense that we had to live with,” Lutnick told CBS, echoing Trump’s claim that Biden-era spending drove inflation and created an unsustainable economic sugar high. Lutnick said Trump’s policies will be revenue-generating: “They produce growth. They produce factories being built here.”

The University of Michigan’s consumer confidence came ahead of the Federal Reserve’s decision to hold interest rates steady in the 4.25–4.50 percent range.

The Fed raised rates by 5.25 percentage points in 2022 and 2023 to combat inflation, which surged to a multi-decade high of 9 percent during Biden’s tenure.

Meanwhile, in contrast to the University of Michigan data, the latest Freedom Economy Index (FEI) survey reveals a dramatic turnaround in sentiment among America’s small businesses.

The March 2025 survey, which polled a nationwide sample of 50,000 small business owners, shows a seismic shift—with 80 percent now reporting increased economic optimism since November, and 68 percent expecting economic growth in 2025. This marks a sharp reversal from October 2024, when 57 percent were predicting a recession.