Recent volatility in the economy and the stock market, driven by tariffs and mass layoffs, has led to a plunge in consumer confidence. In fact, consumers feel 13% less confident about their financial outlook this month than they did one year ago, according to the latest WalletHub Economic Index, released today. While this is the fourth-sharpest yearly drop in consumer confidence recorded since December 2020, consumer sentiment is only at its 14th-lowest point in the past five years.
The WalletHub Economic Index is based on a monthly survey that evaluates economic prospects based on 10 components of consumer sentiment. These components revolve around how people feel about their finances, purchasing plans and employment opportunities.
Key Stats
- Real estate popularity drop: Home-buying interest among consumers decreased by nearly 23% in June 2025 compared to last year, marking the second-largest decrease recorded since December 2020.
- Decreasing interest in auto purchases: The share of consumers who expect to buy a car in the next six months is roughly 21% lower in June 2025, compared to last year. This is the third-highest drop in auto purchase interest on record since December 2020.
- Large purchases are not a priority: In June 2025, consumers’ likelihood of making a large purchase in the next six months is almost 13% lower than last year, the third-sharpest drop in consumers’ interest in large purchases since December 2020.
- Decrease in optimism: In June 2025, consumers’ optimism about whether their finances will improve in the next six months is over 7% lower, compared to last year. This represents the fifth-most significant drop in financial outlook sentiment since December 2020.
- Less new employment opportunities: The share of consumers who feel new employment opportunities are “abundant” is about 5% lower in June 2025 compared to last year.
The complete WalletHub Economic Index results can be found at:
https://wallethub.com/edu/
“The 13% decrease in consumer sentiment over the past year is a worrying sign that our economic recovery may be stalling, and it demonstrates that people are not optimistic about their financial future. People who have low financial confidence are likely to spend less money, make fewer large purchases, and pay down less debt than people with high confidence. As a result, when consumer sentiment experiences a significant decrease, that is negative for the economy.”
- Chip Lupo, WalletHub Analyst
Expert Commentary
Why is consumer confidence going down overall?
“I believe consumer confidence may be on the decline…due to uncertainty. There is much to be uncertain about. Although inflation has not escalated significantly, it has not gone down. The Fed has indicated they are not lowering the Fed Funds rate and will wait and see, and employment is being affected. Businesses are having difficulty developing plans effectively, due to uncertainty, and with rates not declining, they will not take on major expenditures or growth projects until they have more certainty. Tariffs are central to this.”
Dr. Kent Belasco, CPA – Director, Commercial Banking Program; Professor, Marquette University
“Consumer confidence is declining due to uncertainty about government economic policies, particularly regarding tariffs, trade agreements, and tax changes. When people don't know what policies will be implemented, they become more cautious with their spending and saving decisions. Although some economic indicators like employment remain stable, consumers are still concerned about rising costs for essentials like housing, food, and transportation. This creates a gap between what economic data shows and how people actually feel about their financial situation. ”
Dr. Abdullah Al Bahrani – Associate Dean for Graduate Programs and Research; Professor, Northern Kentucky University
In what ways have the 2024 elections affected the financial decisions of households and businesses?
“I would say, originally, exuberance. Especially with the prospects of tax relief, and a decline in government spending and improved efficiency. I believe households were poised to anticipate the improved economy and consider making more financial decisions that, perhaps, were put off. For businesses, optimism and growth. In the banking sector, prime for M&A. However, much of this has not happened. The stock market has been volatile, inflation remains about the same if not ticked up, employment is somewhat uncertain and the Fed is waiting to see what will happen. This translates into inaction. Therefore, I think most businesses and households were primed for a great economy, and now, not to say it will not happen, but it is definitely on hold.”
Dr. Kent Belasco, CPA – Director, Commercial Banking Program; Professor, Marquette University
“The election created uncertainty that caused both businesses and families to delay major financial decisions. Companies postponed investments in new equipment, facilities, and hiring because they wanted to see what policies the new administration would implement. This cautious approach by businesses may lead to fewer job opportunities and slower wage growth for workers. At the same time, households responded by increasing their debt levels and reducing savings, partly because some families rushed to make purchases before potential price increases from new trade policies. This combination of reduced business investment and changed consumer behavior creates economic uncertainty about what the future holds.”
Dr. Abdullah Al Bahrani – Associate Dean for Graduate Programs and Research; Professor, Northern Kentucky University
With the ongoing uncertainties in this economy, what steps can individuals take to protect their personal finances?
“With the stock market somewhat volatile, it is best to not sell in down markets, and that patience rules, as the future may be very bright, all things considered. That is the first, patience. Secondly, as rates remain higher take advantage of higher deposit rates and consider CDs, and/or Money Markets to earn higher, and ‘safe’ interest. These deposits are insured and will help to protect wealth. Also consider that bank deposits are insured to $250,000 per individual. However, if one has more than this at a single bank, they can re-title deposits in joint accounts, trusts, or other titles to have more insured. Talk to your personal bankers and they can guide you. Monitor the tax structure being proposed in Washington and see how that affects you, and plan for that from a budget standpoint to take advantage of the benefits. Probably not the best time to consider making major job changes, as it may be difficult to get the next job, as employers are pulling back on hiring. Make sure you have a budget, and plan in the near future. Right now is an uncertain time, and when that occurs the status quo may be best, until we can see the direction of the economy. So, I favor the budgets and planning over the next year or so, to maybe delay some things until we can see where things are going. May not be the absolute best time to retire. If you can hold off another year or unless you do not plan to tap into your nest egg for a while, that may be prudent. There is a likelihood that we will be in a period of retoolling manufactures to accommodate producing more in the US, that will likely affect supply chains and slow things down. Best to plan for that in the near term.”
Dr. Kent Belasco, CPA – Director, Commercial Banking Program; Professor, Marquette University
“Build a strong financial foundation by maintaining an emergency fund that covers six to twelve months of living expenses. Since interest rates remain high, carefully manage debt by paying down high-interest credit cards first and considering debt consolidation options. Diversify investments across different types of assets and markets to reduce risk and make sure your portfolio risk level matches your risk preferences. Create a flexible budget that prioritizes necessary expenses while allowing you to adjust discretionary spending as the market environment changes.”
Dr. Abdullah Al Bahrani – Associate Dean for Graduate Programs and Research; Professor, Northern Kentucky University
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