In the once-steady landscape of the American economy, a tempest is brewing, and its dark clouds are casting long, foreboding shadows over the hopes and aspirations of consumers. The winds of change, laden with the threat of higher inflation and rising unemployment, are howling louder with each passing day. As President Donald Trump prepares to unleash a new wave of tariffs in just a few days, the collective anxiety of the American populace is reaching a fever pitch. The University of Michigan’s latest survey, released Friday, reveals a stark and unsettling truth: consumer sentiment has tanked by 12% this month, a decline steeper than even the preliminary readings had suggested. The culprit, according to respondents, is clear — Trump’s erratic trade war, a policy that has sown seeds of uncertainty and dread in the hearts of many.

“Consumers continue to worry about the potential for pain amid ongoing economic policy developments,” Joanne Hsu, the survey’s director, lamented in a release. The numbers speak volumes: two-thirds of consumers now expect unemployment to rise in the year ahead, the highest reading since the dark days of 2009. It is as if a collective premonition has taken hold, a sense that the economic stability many have come to rely on is slipping through their fingers like sand.

On Wednesday, the storm is set to intensify as Trump announces duties that match those imposed by foreign countries on the United States — so-called reciprocal tariffs, which he has ominously referred to as “the big one.” Just this week, Trump escalated his trade war further by imposing a staggering 25% tariff on all car imports, set to take effect on April 3. This follows a series of punitive measures, including tariffs on metals and a doubling of duties on China to 20%. The Michigan survey’s “expectations” index, which captures respondents’ outlook for the economy, has plummeted by 18%, having now lost more than 30% since November 2024. This time, the malaise is not confined to Democrats and Independents; Republicans, too, have grown gloomier, expressing worsening expectations for their personal finances, business conditions, unemployment, and inflation.

The specter of inflation looms large, with Americans’ expectations for price increases in the year ahead climbing to 5% this month, up from 4.3% last month. This marks the highest level since November 2022. Meanwhile, inflation expectations for the next 5 to 10 years have also surged to 4.1%, the highest level since February 1993. “It’s natural for people to expect higher prices because we haven’t seen a trade war like this since McKinley,” Art Hogan, chief market strategist at B. Riley Financial, observed to Matt Egan. “Sentiment is soft data. We’re used to soft data being abysmal. It doesn’t usually line up with what they do,” Hogan added. “The ongoing battle between soft and hard data has yet to be resolved.”

The Federal Reserve, the nation’s economic guardian, has thus far maintained that long-run inflation expectations remain mostly in check. However, this fragile equilibrium could shatter if expectations continue to trend in the wrong direction. If consumers’ predictions of rising unemployment come to pass, the Fed’s task will become exponentially more complex. The Fed pays close attention to people’s perceptions of prices because these expectations can be self-fulfilling. If consumers anticipate inflation to climb and remain elevated, they are likely to adjust their spending accordingly. Officials have warned that they will recalibrate their plans if it becomes clear that expectations have indeed taken a turn for the worse.

“If inflation expectations are threatening to become unanchored or becoming unanchored in the long term, then the balanced approach may not work,” St. Louis Fed President Alberto Musalem cautioned at an event in Paducah, Kentucky. This would mean the Fed will “probably lean in to the inflation side” of its so-called dual mandate, which is to promote full employment and stabilize prices. In such a scenario, any further rate cuts would be off the table for the foreseeable future. But now, there is also the looming possibility of the US economy weakening as shoppers curb their spending. When the economy weakens more than expected, pushing up unemployment, the Fed usually responds by lowering borrowing costs.

Fresh data released Friday shows that consumer spending rebounded in February, advancing 0.4% for the month, after declining 0.3% in January. However, people notably cut back on dining out and hotel stays. Consumer spending accounts for about 70% of economic output, so if this key economic engine begins to sputter, it would not bode well for the broader US economy. “The latest consumer health check revealed consumers are increasingly apprehensive about spending amid sticky inflation trends and pre-emptive inflation anxiety from tariffs, flagging consumer sentiment, and rising job insecurity,” Lydia Boussour, senior economist at Ernst & Young, remarked in her commentary issued Friday.

In this precarious economic landscape, the American consumer stands at a crossroads. On one hand, the allure of economic stability and prosperity beckons, a promise of better days ahead. On the other, the specters of tariffs, inflation, and unemployment loom, threatening to snatch away the gains of years of hard work and sacrifice. The decisions made in the corridors of power will have far-reaching consequences, not just for corporations and policymakers, but for every American household struggling to make ends meet.

As the storm clouds gather, it is imperative that policymakers heed the warnings of economists and the collective anxiety of the American people. The path forward must be one of measured caution and strategic foresight. The future of the American economy, and the dreams of its people, hang in the balance.