From Yahoo Finance: 2025-03-29 06:00:00

Recent consumer sentiment data has been grim, with President Trump’s tariff policy souring outlook. The consumer confidence index hit a more than four-year low in March. Economic forecasters have lowered growth expectations, but a recession is not a consensus call on Wall Street.

High-income earners are crucial to US consumer spending. Their spending could act as an economic firewall against a weakening consumer, preventing a recession. However, uncertainty affecting consumer sentiment and the stock market may pressure high-income spending, increasing recession risks.

Wealthy Americans have been spending more post-pandemic, aiding US economic growth. A larger equity market sell-off could prompt them to save more, slowing consumption and potentially tipping the economy into recession. The US savings rate is a key indicator to watch for signs of economic stability.

Policy uncertainty, job cuts, tariffs, and market pullback may push the savings rate higher, capping consumer resilience. Wall Street is closely monitoring these factors. Risks are tilted to the downside if upcoming events worsen economic conditions.

Moody’s chief economist Zandi and others warn of the risk of increased personal saving rates amid economic uncertainty. This trend could slow consumption and potentially lead to a recession. Wall Street is keeping a close eye on these developments for potential economic impacts.

Read more: A looming risk to the US economy: Chart of the Week