US economy – is the honeymoon over?

In the few weeks since taking office, President Trump has subjected the US political and economic system to shock therapy. It will take some time before the success or failure of this approach is reflected in the real economic data. The situation is different for sentiment indicators. These are showing some strong movements.

Economic policy uncertainty is rising sharply...

The Economic Policy Uncertainty (EPU) index for the US is available on a daily basis. This index is based on an analysis of US newspapers for certain keywords, for example the combination of “economy” and “uncertainty”. The long-term average is 100. Since Donald Trump's election on November 5, 2024, this index has risen sharply, to an average of almost 330 in the last 30 days. Only during the coronavirus crisis was this index at a higher level. Sub-indices for trade policy uncertainty have risen even more sharply and are at a record high.

... and consumer sentiment is down

US consumer sentiment is measured by various surveys:

• The Conference Board Consumer Confidence Index fell by 7 points to 98.3 in February, an unexpectedly sharp decline. Since the interim high of 112.8 in November 2024, the election month, it has fallen by 14.5 points.
• The corresponding survey by the University of Michigan fell by 6.4 points to 64.7 in February, the lowest since November 2023. Particularly interesting is the partisan polarization of sentiment. Since Trump's election, consumer sentiment among consumers who lean Democratic has fallen the most. By contrast, sentiment among Republicans has improved. A mirror-image development was observed with the election of Biden in November 2020. The informative value of consumer confidence for economic development should therefore be treated with caution.

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