Neither Pepsi nor Procter & Gamble escape fear: this is how they see today’s consumer and predict a consumer crisis

On Tuesday, the Conference Board, an organization that tracks consumer confidence among other economic indicators, will release the report for April. As the White House has imposed sweeping tariffs, including a 145 percent levy on most imports from China, 10 percent on nearly all imports, and 25 percent taxes on steel, aluminum, and automobiles, consumer confidence has continued to fall.

As of March, the Conference Board reported that the index had fallen for the fourth consecutive month and was already reaching historic lows. With prices still elevated and inflation expected to increase, many economists are warning that the April report could paint an even more dire picture.

Why consumer confidence matters

Consumer confidence is a metric tracked closely by economists, investors, and businesses because of the power this group has over the economy.

When confidence is low, consumer behavior can shift towards saving if households are worried that an economic downturn is approaching and they anticipate a decline in their incomes. If consumers cut back on spending to levels where aggregate demand falls, a recession can take hold, with businesses taking in less revenue and laying off workers to reduce costs. If unemployment ticks up, aggregate demand can continue to fall, and thus a vicious cycle begins. The vast majority of consumers are workers who are at the whim of the market, and that vulnerability is what can lead to this sort of situation.

No company is safe as consumers look to save

NPR reported that across industries, major corporations are adjusting their revenue forecasts downward, either because they are seeing sales decline as consumers hold onto their money or because they are facing higher costs due to tariffs. Consumers aren’t feeling good about the economy, and now corporate America is souring on them as well. In an investor call this week, PepsiCo’s CFO Jaime Caulfield, said that the company was not “feeling as good about the consumer” as they were three months ago. And Pepsi is far from the only company issuing these warnings.

Either because economic uncertainty is leading consumers to cut back on spending, or because tariffs will erode their bottom line. Procter & Gamble, the company behind common household brands like Tide, Oral-B, Pampers, and many more, said that as a result of increased costs, they are looking to raise prices on consumers.

Economic reports to keep an eye out for in the coming weeks

The Bureau of Economic Analysis (BEA) will release the Personal Income and Consumption report for March next week, which will provide a look into how consumers felt as tariffs were being announced. In late May, the April report will add much-needed context on how spending by consumers changed in the weeks following the tariffs taking effect.

Additionally, on Friday, May 2, the Bureau of Labor Statistics (BLS) will release the April Employment Report, which will be the first look at how the labor market has been affected by tariffs and increased economic uncertainty. Lastly, on Tuesday, May 13, the BLS will release the April Consumer Price Index report, which will shed light on any inflationary impacts tariffs had on prices this month.

All eyes are on the Federal Reserve

Between these two key reports from the BLS, the U.S. Federal Reserve will announce whether any changes will be made to the federal funds rate (FFR), which is used by other banks and lending organizations when they add an interest rate to their loans. The FFR is considered the baseline interest rate, and President Trump has called on Fed Chair Jerome Powell to lower it.

The Fed is an independent organization and does not take orders from the White House. The interventions by the president that infringe on the independence of the central bank rattled investor confidence to such an extent that the president had to walk back threats that he was considering firing Chair Powell and replacing him with a loyalist.

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