The David Lin Report Consumer Sentiment Flashing Recession Signals? Economist Explains Latest Data | Joanne Hsu
Jul 30, 2025
Joanne Hsu, Director of Surveys of Consumers at the University of Michigan, dives into the current state of U.S. consumer sentiment. She reveals how fears of trade tariffs and inflation are causing distress among consumers, especially affluent ones. Hsu discusses the predictive power of consumer sentiment as a key economic indicator, emphasizing its correlation with spending patterns. The conversation also highlights challenges in the labor market and the importance of ongoing research to understand sentiment trends better.
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Consumer Sentiment Driven by Tariff Fears
- Consumer sentiment remains low due to widespread fears about trade tariffs and inflation.
- Consumers are anxious about future job security and inflation risks despite slight recent sentiment upticks.
Tariffs Equalize Sentiment Across Wealth
- Wealthy consumers' sentiment has declined despite strong stock markets due to tariff policy concerns.
- Tariff uncertainty causes sentiment convergence across wealth levels, a departure from past trends.
Sentiment as Economic Downturn Predictor
- Historically, sharp consumer sentiment drops precede economic downturns.
- The current weak labor market expectations contrast with 2022's sentiment-labor market disconnect.