Retail sales barely moved in February, rising just 0.2% when expectations were triple that. The previous month saw a sharp 1.2% drop. Consumers are pulling back, and the warning signs are everywhere.
Consumer sentiment is unraveling fast. According to Apollo’s chief economist Torsten Slok, households across all income levels are feeling the strain. Fears of job losses have hit recessionary levels, and a record share of consumers believe business conditions will only get worse. This isn’t a temporary dip—this is the makings of a deeper economic shift.
The numbers don’t lie. Nearly 60% of consumers now expect economic conditions to deteriorate in the next year. That’s a historic high, surpassing pessimism seen during the 2008 financial crisis, the early ‘90s recession, and even the downturn of the ‘80s. If consumer sentiment drives spending, what happens when confidence craters?
Household income expectations are sliding, while inflation worries are accelerating at a pace rarely seen. This creates a toxic mix—people expect their wages to weaken while prices climb higher. The Fed says inflation is cooling, but Main Street isn’t feeling it.
For those paying attention, history offers a lesson. Legendary investor Stanley Druckenmiller made his mark by buying long-term Treasuries ahead of market turmoil. With rates hovering around 4%, some see an opportunity to do the same. When the masses panic, smart money looks ahead.
Sources:
https://www.reuters.com/business/us-consumers-expect-business-conditions-worsen-record-2025-03-16/
https://www.apollo.com/economics/torsten-slok-analysis-2025-consumer-confidence-charts/
https://x.com/elerianm/status/1901257757346414855
https://x.com/GlobalMktObserv/status/1901627078073856114
https://x.com/Mayhem4Markets/status/1901630145372291317
https://x.com/TaviCosta/status/1901389619322880423