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Mortgage rates are on the retreat this week as the latest data on the economy has investors who fund most home loans worried that tariffs will not only fuel inflation but lead to a recession.
The Conference Board reported Tuesday that its Consumer Confidence Index dipped for the fifth consecutive month in April, to 86 — the lowest level since May 2020, the onset of the COVID pandemic.
Mark Zandi
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The U.S. trade deficit hit an all time high in March and job postings shrank more than forecasters were expecting, with a federal hiring freeze in place and uncertainty over the economy putting a chill on private sector hiring.
The 19-point drop in the Consumer Confidence Index over the past three months is “just shy of the recession threshold of 20,” Moody’s Analytics Chief Economist Mark Zandi posted on X. “Unless the trade war cools off very (very) soon, recession appears dead-ahead.”
Consumer confidence falters
“One positive note is that the slide in confidence was mostly due to weaker consumer expectations,” Zandi added. “Present assessments are holding up better. This suggests confidence could recover quickly with good news on the trade war, heading off a recession.”
In the latest back and forth on tariffs, President Trump signed an executive order Tuesday aimed at providing U.S. automakers some relief by “de-stacking” tariffs to avoid the cumulative effect of overlapping tariffs on other items like steel and aluminum.
The Conference Board reported that its Expectations Index, which tracks consumers’ short-term outlook for income, business and labor market conditions, fell 12.5 points to 54.4 — the lowest level since October 2011, and below a threshold of 80 that usually signals a recession ahead.
Stephanie Guichard
Consumers surveyed by the Conference Board through April 21 said they expect inflation will hit 7 percent in the next year, the most pessimistic reading since November 2022, when the U.S. was experiencing “extremely high inflation,” Conference Board economist Stephanie Guichard said, in a statement.
The decline in consumer confidence was shared across all political affiliations, and consumers “explicitly mentioned concerns about tariffs increasing prices and having negative impacts on the economy” in write-in responses, the Conference Board said.
Job openings trend down again
Employers were looking to fill 7.192 million job openings in March — a drop of 288,000 from February and 901,000 from a year ago, the Bureau of Labor Statistics reported Tuesday. Economists had expected job openings to hold steady at 7.5 million.
Federal government job openings fell by 36,000 in March, while “the surge in economic policy uncertainty in March, mostly relating to tariff policy,” was the primary driver of the 229,000 decline in private sector job openings, Pantheon Macroeconomics Chief U.S. Economist Samuel Tombs said in a note to clients.
Samuel Tombs
“In particular, openings in the transportation, warehousing and utilities sector dropped by a relatively large 59,000, as businesses geared up for lower levels of demand for goods,” Tombs said. “Meanwhile, healthcare job postings fell by 45,000 and now are back in line with their long-run level, relative to the number of jobs.”
Tariffs on some goods from China have been increased by as much as 170 percent this year, with most of that hike taking effect April 9.
The Trump administration’s threats to raise tariffs on China and other U.S. trading partners prompted a rush of imports in March that pushed the U.S. trade deficit to a record high of $162 billion, according to an advance reading published by the Census Bureau Tuesday.
Trade deficit widens
U.S. companies imported an all-time high of $342.7 billion in goods last month, up $16.3 billion from February.
Economists have forecast that economic growth slowed to an annual rate of 0.4 percent during the first quarter, down from 2.4 percent in the final three months of 2024. The Bureau of Economic Analysis is scheduled to release an estimate of Q1 gross domestic product (GDP) growth on Wednesday.
The latest advance economic indicators pushed the Atlanta Fed’s GDPNow forecasting model’s estimate of Q1 annual GDP growth down to -2.7 percent Tuesday, from -2.4 percent on April 24.
Mortgage rates retreat from 2025 high
At 6.76 percent on Monday, rates on 30-year fixed-rate mortgages were down four basis points from Friday and 29 basis points from a 2025 high of 7.05 percent registered Jan. 14, according to rate lock data tracked by Optimal Blue.
Yields on 10-year Treasury notes, a barometer for mortgage rates, fell five basis points Monday and another four basis points Tuesday.
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