A wave of economic indicators from March and early April paints a sobering picture of the U.S. economy, as small business optimism dips, inflation cools unevenly, and consumer sentiment plunges — all under the shadow of President Donald Trump’s volatile trade policies and unpredictable approach to global tariffs, according to a recent report from the California Association of Realtors (CAR).
As the report noted, the NFIB Small Business Optimism Index fell by 3.3 points in March to 97.4 — the lowest reading in years and below the 51-year average of 98. Business owners, increasingly worried about taxes and future conditions, registered their sharpest drop in optimism since December 2020. The survey was conducted before Trump’s administration announced sweeping global tariffs on April 2, signaling that even deeper pessimism could follow in the months ahead.
Trump’s abrupt shift from selective tariffs to a universal 10% rate — sparing only China, which now faces a staggering 145% tariff — has left markets and businesses reeling. While certain building materials like lumber and aluminum were temporarily exempt, uncertainty surrounding future policy has cast a long shadow over the housing market, CAR explained.
Construction costs are expected to rise, potentially driving up home prices and further slowing the sector.
“Trump’s whiplash-inducing tariff policy is causing more confusion than clarity,” CAR’s analysis noted. “Markets hate uncertainty — and that’s exactly what they’re getting.”
Though March brought a modest reprieve from inflation, with the Consumer Price Index (CPI) falling 0.1%, the relief may be short-lived. The 12-month inflation rate slipped to 2.4% — its lowest since early 2021 — thanks in large part to a 6.3% drop in gas prices. But food costs rose 0.4% month-over-month, and core inflation remained sticky at 2.8%. Economists warn that newly implemented tariffs are likely to reverse any gains, driving up prices on imported goods in coming months.
Labor market data offered little comfort. Initial jobless claims ticked up to 223,000 in early April, while continuing claims dropped slightly to 1.85 million. The numbers suggest that while some Americans are still finding work, businesses may begin shedding jobs as tariff impacts deepen.
Perhaps most alarming is the American public’s outlook. The University of Michigan’s consumer sentiment index plunged 11% in April — its fourth consecutive decline and a staggering 30% drop since December. Fears of recession are mounting, fueled by rising inflation expectations, income anxiety, and deteriorating confidence in the labor market.
Inflation expectations have now jumped to 6.7% — their highest level since 1981. According to CAR’s findings, this spike reflects growing fear that prices will spiral further amid tariff-driven supply chain disruptions.
As the Trump administration doubles down on its economic nationalism, economists warn that the consequences are already becoming visible. “Trade wars are easy to win,” Trump once famously declared. But for many Americans — from small business owners to homebuyers to workers — that victory may be looking increasingly hollow.
