Posted originally on Apr 22, 2025 by Martin Armstrong 

Consumer confidence has tanked due to tariff fears. A Redfin survey conducted from April 10 to 14 found that nearly a quarter (24%) of American respondents have canceled major purchases, such as homes, due to tariffs, with an additional 32% stating they plan to delay any major purchases until they regain confidence in the economy.

Fifty-five percent of respondents said they are less likely to make a major purchase in 2025, with 39% saying they are “much less likely” to do so. On the other hand, one in 10 respondents stated that they plan to make a major purchase immediately, expecting prices to continue rising. Unsurprisingly, Republicans have more confidence in the current economic plan, with 19% saying they are “much less likely” to make a purchase this year compared to 60% of Democrats.

The US real estate market remains in a buyer’s market. Housing prices have been on the rise for the past five years, inventory in high-demand areas remains low, and mortgage rates have not waned in a meaningful way. Existing home sales fell 1.3% in March on a monthly basis, marking a six-month low of 4.15 million units. Pending sales declined 5.2% in major metro areas, with homes spending an average of 53 days on the market. Around 17.5% of sellers cut their existing home sale prices, a high not seen since 2016.

While we are not seeing this trend with real estate, Americans are rushing to purchase autos before prices rise. Auto sales in March were the strongest on record since January 2023 as consumers rush to secure pre-tariff pricing. Auto sales in March were up 17.3% YoY for retail, with fleet sales increasing 5% on an annual basis. No one expects auto prices to decline in the near future, and people who need a vehicle are rushing to finalize purchases before costs begin to rise.

Cox Automotive found that new retail sales increased nearly every week since the tariffs were announced, with “a strong surge at month-end with the import tariff announcement creating urgency in the final five days of the month.” J.D. Power announced that automakers have been offering higher discounts and incentives worth an average of $3,059 to attract potential buyers.

Now, Trump has hinted that he may delay certain auto tariffs on foreign vehicles due to the backlash. American consumers are still rushing into the market to purchase cars at “pre-tariff prices,” as everyone expects prices to rise. The real estate boom post-pandemic has ended, and the majority are not looking to purchase a home at this time. Our computer models indicate that we will see a reversal in trend back to a seller’s market by August 2028.  The 2007 high on the Shiller Index was the precise day of the Economic Confidence Model. So far, all the indicators have confirmed that we should have a recessionary trend into 2028 with this turn in the model on this wave.

It is never a good sign when consumers lose confidence in the economy. This will become one of the reasons for declining GDP, as consumer spending is absolutely critical to America’s overall economy.