The Penta-CivicScience Economic Sentiment Index (ESI) decreased 1.3 points to 31.5, its lowest recorded point since July 2022 amid the ongoing economic responses to tariffs.
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All five of the ESI's indicators decreased during this two-week period. Confidence in personal finances decreased the most, falling 3.8 points to 47.3.
—Confidence in the overall U.S. economy decreased 1.1 points to 34.5.
—Confidence in buying a new home decreased 0.8 points to 21.8
—Confidence in making a major purchase decreased 0.7 points to 23.6.
—Confidence in finding a new job decreased 0.1 points to 30.2.
After the initial enactment of President Trump's "reciprocal" tariffs at midnight on April 9, the tariff plan was later paused that day, bringing all tariffs to a universal 10 percent with the exception of China upon which the administration imposed a 145 percent tariff on the following day. Regarding this pause, President Trump acknowledged that the bond market was "getting a little queasy" as investors began to sell off not just stocks but also U.S. Treasury bonds.
In response to the U.S.' 145 percent tariff, China imposed a 125 percent tariff on U.S. goods. U.S. Treasury Secretary Scott Bessent stated that neither China nor the U.S. "thinks the status quo is sustainable" and stated that he is anticipating a "de-escalation" in the trade tensions between the two nations.
In the days following the president's temporary reversal of his "reciprocal" tariff plan, additional exemptions were granted for smartphones and other consumer electronics. The Trump administration has also discussed further measures to address U.S. competitiveness and foreign trade barriers to maritime shipping and shipbuilding, pharmaceuticals, semiconductors, and critical minerals. Additionally, the administration imposed tariffs as high as 3,521 percent on solar imports from Cambodia, Thailand, Vietnam and Malaysia.
In the wake of these tariffs, the International Monetary Fund (IMF) slashed U.S. growth projections for 2025 down 0.9 percentage point from its January forecast, projecting a growth rate of 1.8 percent. Importantly, this calculation is based on data available as of April 4, meaning it does not include the 90 day pause in tariffs. The IMF also reduced its global growth rate projection 0.5 percentage point to 2.8 percent. The IMF's chief economist, Pierre-Olivier Gourinchas stated "The surge in policy uncertainty is a major driver of the economic outlook. If sustained, the increase in trade tensions and uncertainty will slow global growth significantly, reflecting this complexity."
Leading U.S. economic figures also expressed uncertainty in the wake of these tariffs. JPMorgan Chase CEO Jamie Dimon stated "The economy is facing considerable turbulence… with the potential positives of tax reform and deregulation and the potential negatives of tariffs and 'trade wars,' ongoing sticky inflation, high fiscal deficits and still rather high asset prices and volatility." Federal Reserve Chair Jerome Powell told the Economic Club of Chicago in a speech that, "Tariffs are highly likely to generate at least a temporary rise in inflation" and that slowing economic growth alongside rising inflation could cause stagflation, further complicating the Fed's efforts to fulfill its dual mandate to achieve both maximum employment and stable prices.
The March Consumer Price Index (CPI) showed that inflation fell 0.1 percent month-over-month, marking the first time this metric has declined since May 2020. Meanwhile, year-over-year inflation rose 2.4 percent, cooling after rising 2.8 percent in the twelve months ending in February. These data are positive and a welcome sign to consumers in the face of high prices, though the Wall Street Journal notes that these data likely do not account for the tariffs, and that rather, tariffs will likely impact the April inflation report.
The ESI's three-day moving average began this two-week stretch at 31.9 on April 9. It then decreased to a low of 30.6 on April 10, oscillated, and then increased to a high of 32.4 on April 13. The three-day moving average then oscillated again before declining to 31.1 on April 22 to close out the session.
The next release of the ESI will be on Wednesday, May 7, 2025.