“Job uncertainty [is] taking a toll,” reported Jefferies Equity Research analyst David Katz in an April 1 investor note. He wrote that consumer sentiment was lower than when last surveyed, two weeks prior, but that the decline was slowing.
He also found that tariffs are already taking a toll on spending plans, “likely due to employment uncertainty. That said, balance sheets are probably in decent shape. For now.”
Although consumer attitudes were at what Katz characterized as a post-election low, he thought a near-term trough in sentiment was at hand. “A slight dip in present personal finances is a clear negative, but we also saw improvement in perceived current buying conditions and slowing declines in expected business conditions.”
A dip in personal finances was reported to have decelerated. Also, Katz found a disconnect between the responses of self-identified Republicans and Democrats, the widest in the survey’s seven-year history.
Jefferies’s Consumer Pulse survey sampled 1,000 respondents. Katz found the responses in line with recent government hiring freezes and terminations.
Thirty-one percent of those surveyed expected their employer to begin laying off workers in the next 90 days. Thirty percent reported their hours being cut in March. Fully 28 percent reported having a friend or family member impacted by governmental job decreases. “This hints toward a broader potential hit to consumer sentiment than what the relatively small number of lost jobs might suggest at face value,” Katz explained.
He continued that consumers sounded “roughly OK.” Savings trends were firm, with two-thirds saving as much or more money than previously. “However, recent inflationary pressures and trade uncertainty appears to be taking a toll on run-rate spending,” Katz continued.
Tariffs had caused 55 percent of those surveyed to change their spending habits. Vacation plans had been altered or scrapped for 36 percent. Seventy percent said they were eating out less, while fewer than 20 percent said they would buy a new car in the coming 90 days “implying auto tariffs could draw a significant rebuke” from consumers.
Politically, more respondents identified with the GOP than before. “That said, we note that this group remains below the post-inauguration sentiment high.”
Sentiment downturns were particularly marked amongst Generation Z respondents, while Millennials showed the sharpest decline of all age demographics, although still more optimistic than before the last election.
Baby Boomers remained the most upbeat, with the divergence between themselves and younger cohorts said to be at its widest in 18 months. “GenX sentiment fared best and improved in the most recent week, snapping a 5-week losing streak.”
Only those highly educated respondents reported their sentiment to be unchanged. Despite a slight March resurgence, college-educated consumers were said to be in an overall downward curve, while “our less-than-college cohort had been hanging in, but moved to the worst sentiment position on the most recent (3/30) data.”
Overall, respondents were found to be “fairly concerned about the labor market. While other broadly cited surveys have also captured increasing fears of job loss, nearly one-third of our respondents expect pink slips to go out” by year’s end.
Katz felt that the loss of three million government jobs was having an exaggerated effect on the public’s mood: “Again, nearly one-third of our respondents said they had a family member or a friend who has been impacted.”
