Investor Sentiment Falls 20 Points, Lowest Since 2008 Financial Crisis

Key Takeaways 

• U.S. consumer sentiment dropped by 20 points in March, reaching its lowest since the 2008 financial crisis.
• The Trump administration’s new trade policies, including introducing tariffs, contribute to heightened market uncertainty.
• The market is experiencing significant volatility as uncertainty over tariff implementation weighs on investor sentiment.

As fears of a potential recession grow, U.S. consumer sentiment has plunged to its lowest level since the 2008 financial crisis , signaling a shift in how Americans view the economy’s future.

Confidence drop fuels concerns about the impact of economic slowdowns and escalating trade tensions.

With tariffs set to intensify and inflationary pressures mounting, the outlook for both consumers and businesses looks increasingly bleak, sending shockwaves through financial markets.

U.S. Investor Sentiment Back to 2008 Levels

The U.S. Economic Policy Uncertainty Index significantly declined in March, falling by approximately 20 points in just one month to 57.

This is the lowest sentiment reading since the 2008 financial crisis, reflecting a marked shift in consumer outlook. The sharp drop in sentiment indicates widespread pessimism, with many Americans expressing concerns over the economy’s future.

“Policy uncertainty is above just about any crisis in modern U.S. history. We are seeing 80% higher uncertainty levels than in 2008. As a result, market swings are widening, and we expected an extremely volatile week,” The Kobeissi Letter analysts said .

Tariffs Hit Investor Confidence

The ongoing economic challenges are being exacerbated by the Trump administration’s new trade policies, including establishing the “External Revenue Service” and introducing substantial auto tariffs.

These tariffs are set to impact over $275 billion in auto imports annually, creating significant uncertainty in the market.

The administration’s goal of generating $800 billion in tariff revenue each year is, in effect, creating a new tax burden on imports. This shift may lead to higher consumer prices, driving inflationary pressures across the economy.

The previous round of tariffs during Trump’s “Trade War 1.0“ saw prices rise by 4% in categories directly affected by tariffs, while non-tariffed categories experienced a decrease.

Experts warn that with inflation likely to run hot in the second quarter of 2025, the economic slowdown is becoming more evident, dampening consumer and business confidence alike.

Market Reacts Negatively

U.S. stock futures dropped early Monday as traders awaited clarity on President Trump’s tariff plans ahead of “Liberation Day.”

Dow Jones futures fell by 178 points, or 0.4%, while S&P 500 and Nasdaq 100 futures dipped by 0.7% and 1.1%, respectively.

The uncertainty surrounding Trump’s tariffs has weighed on equities, pushing stocks lower on Friday. Trump did little to ease concerns, with reports indicating he urged advisers to take a more aggressive stance.

On Wednesday, investors hope to gain more clarity regarding which trading partners will be impacted and to what extent.

Barclays strategist Emmanuel Cau noted that while markets have already priced tariff risks, the trade war’s uncertain outcome could weigh on global growth.