In a plot twist nobody saw coming (not that we’re shocked), U.S. consumer confidence just dropped harder than a lead balloon. According to the Conference Board, February witnessed the most dramatic plummet in consumer confidence in over four years, falling from a blissfully misguided 105.3 in January down to a dismal 98.3. So much for that feel-good vibe from the holidays, huh?

This nose dive is being attributed to inflation that refuses to play nice and the ever-looming threat of a trade war, thanks, President Trump!, that’s apparently on the minds of more and more Americans. Economists were expecting a less catastrophic drop to a reading of 103, but clearly, the universe had other plans.

On Wall Street, the response was immediate and dramatic. The S&P 500 fell by a cheeky 0.6%, and the Nasdaq took a bigger hit at 1.1%. Meanwhile, the Dow Jones decided it was content to sit still while the others panicked. Such is the rollercoaster that is the current economic climate.

Digging deeper into the Survey of Doom (sorry, we meant to say the Conference Board survey), the measure of Americans’ short-term expectations regarding income, jobs, and business health dropped 9.3 points to a reading of 72.9. A number below 80 suggests a potential recession is knocking at the door, politely asking to be let in. Spoiler alert: it’s not going to be a friendly visit.

Not helping the situation is that a record number of consumers are now predicting a recession within the next year, marking this as the highest forecast in nine months. Pessimism appears to be the flavor of the month, with respondents expressing doubt about business conditions and future job prospects reaching a ten-month peak.

Despite feeling all sorts of optimistic heading into the 2024 holiday season, recent retail sales figures reveal a u-turn with a sharp 0.9% decline, thanks, cold weather, for being a bad economic mood killer. And with inflation slapping us all in the face, the Federal Reserve is now taking a more reserved approach to interest rates rather than going all-in.

In short, growing pessimism among American households doesn’t bode well for the economy. As Carl Weinberg, chief economist at High Frequency Economics, puts it: “Based on all the indicators showing declining consumer and business confidence and sentiment, we are expecting a slowing economy”. Well, isn’t that just peachy? Looks like we might all want to hold off on those avocado toast brunches for now.

In a five-part series of unfortunate events, consumer spending, which makes up a staggering two-thirds of the U.S. economy, seems destined for a rough ride. As we navigate these rocky waters, don’t expect a reality check to sugarcoat things anytime soon.