Consumer Confidence Collapses and Brings International Risks

From Wall Street to the Eurozone: Why US Consumer Confidence Collapse Signals Strategic Risk for European Business Leaders

The latest collapse in US consumer confidence should serve as a strategic wake-up call for European business leaders. Beneath the headlines of volatile equity markets and fiscal reboots lies a deeper, more structural threat: the world’s largest economy is flashing red across multiple economic and psychological indicators. When the American consumer stumbles, the reverberations aren’t local, they are global.

In April 2025, US consumer confidence dropped to 86, the lowest level since the COVID-19 economic shock. More worrying than the headline number is the deterioration in expectations, which fell 12.5 points to 54.4, which is well below the critical threshold of 80 that typically precedes a recession. This is not a blip; it’s the fifth consecutive monthly decline.

According to the Conference Board, pessimism now permeates every expectation metric: business conditions, labor market prospects, and income forecasts. The last time consumer sentiment looked this grim was in 2011, as the global economy grappled with debt crises and austerity. This time, it’s tariffs, inflation, and geopolitical volatility driving the fear.

Consumer Confidence Falls Off a Cliff Thanks to Tariffs and Trade Wars

The data shows a sharp rise in consumer concern over tariffs, which have surged to the top of write-in responses as a dominant worry. President Trump’s aggressive trade stance in his second term, including import taxes and threatened reciprocal tariffs on Europe, is already altering the business landscape. General Motors, JetBlue, and UPS have all pulled financial guidance. UPS is cutting 20,000 jobs. These aren’t cost-saving tweaks. They’re structural reactions to uncertainty.

Meanwhile, the stock market seesaws as investors hedge their bets on rate cuts while ignoring the growing dissonance between Wall Street optimism and Main Street pessimism. With 48.5 percent of Americans expecting stock prices to fall, confidence in market resilience is eroding.

Europe Is Not Immune: Risk Spills Across the Atlantic

This is not just a US story. The Eurozone is starting to mirror this sentiment slump. In March, European consumer confidence dropped to negative 14.5, a steeper-than-expected fall, driven by fears of inflation and stalled growth due to potential US trade tariffs. ECB President Christine Lagarde has already warned that these policies could slash 0.5 percentage points off eurozone growth and add an equivalent amount to inflation.

Germany’s recent fiscal policy shift, including a €500 billion infrastructure and defense package might appear bold, but its real economic impact won’t be felt until 2026 or later. In the meantime, the EU economy is exposed, fragmented, and unprepared for simultaneous supply chain shocks, inflationary surges, and shifting security dynamics.

The Global Economy Is Changing

The global economy is undergoing substantial changes, driven by fundamental shifts in trade policy. This comes at a moment of deep structural transformation: aging populations, persistently high energy costs, and rapid technological disruption.

Europe finds itself particularly vulnerable. The continent is only just beginning to recover from recent shocks, including the energy crisis, Covid, and the fallout from Russia’s war in Ukraine. Yet just as recovery gains pace, public spending needs are rising, public debt is high, and medium-term growth prospects remain weak.

The April 2025 outlook signals a downgrade in growth expectations for the region. Inflation is approaching ECB targets faster than anticipated, but the risks to the outlook are firmly to the downside. These include worsening global trade disputes and increasing macroeconomic uncertainty.

To navigate this turbulence, Europe must urgently prioritize the preservation of openness, manage the fallout from policy shocks through balanced macroeconomic policy, and complete its internal single market. Long-delayed national growth reforms must now be fast-tracked to mitigate the significant international risks.

Strategic Risks European Business Leaders Must Address

1. Economic Fragility and Consumer Retrenchment

European businesses exporting to the US should brace for demand contraction. Lower consumer sentiment translates directly to reduced discretionary spending. The US consumer has historically powered global demand. That engine is now sputtering.

Action: CFOs and strategy heads should revalidate 2025-2026 revenue forecasts, adjust sensitivity analyses, and explore demand diversification across Asia and intra-EU markets.

2. Tariff Spillover and Supply Chain Disruption

The US tariff escalation doesn’t just hurt American companies. European exporters, especially in automotive, tech, and luxury goods, now face increased costs and regulatory uncertainty.

Action: Risk officers should map first-, second-, and third-tier exposure to transatlantic trade routes. Consider nearshoring and multi-sourcing to build resilience.

3. Inflationary Pressure and Consumer Pessimism in Europe

Eurozone inflation may get another unwanted boost from retaliatory tariffs. Combined with falling consumer confidence, this sets the stage for a stagflation-lite environment.

Action: Scenario planning must expand to include inflation-linked demand erosion. CMOs and business unit leads should rethink value propositions and price elasticity across markets.

4. Geopolitical Volatility as a Business Constant

Whether it’s trade wars, energy security, or great power rivalry, geopolitical volatility is now the cost of doing business. European firms can no longer afford to silo risk management from strategy.

Action: Boards should mandate quarterly geopolitical risk briefings. This includes war gaming scenarios, mapping dependencies on US-China trade stability, and evaluating exposure to politically driven tariffs.

5. Crisis Preparedness Must Mature

Most companies are still preparing for yesterday’s crises. But with economic sentiment collapsing in the US, retaliatory trade policy emerging, and stock market volatility increasing, we are moving into a more complex, cross-sector crisis environment.

Action: Crisis simulations must now include economic shocks, tariff retaliation, and digital backlash. Preparedness should be linked to executive decision-making and investor relations, not just business continuity.

It’s Time to Plan for a Corporate Crisis

It’s time for business leaders to consider preparing crisis management plans for a corporate emergency that few had expected: the growing economic uncertainty caused by the actions, decisions, and shifting policies of President Donald Trump.

Trump’s headline-making moves—and some backtracking—have caused the stock market to drop, consumer confidence to fall, and threaten to escalate the cost of materials, supplies, and products. These are early signals that corporations must fortify their operations, protect against downturns, and build truly resilient organizations. As Dominic Bowen notes, “truly resilient organisations bounce back better and even thrive from a crisis that has been successfully managed.”

A Good First Step: Prepare an economic resiliency crisis management plan. According to Vipul Jain, CEO of Red Tulip Media, the fundamentals of such a plan should include: “Diversified revenues, operating adaptability, financial shock absorbers, and instant risk determination.”

Joy Francis, a veteran financial turnaround specialist, stresses that every plan should be anchored on four pillars: cash flow discipline, debt management, supply chain contingencies, and leadership clarity.

Since the beginning of the millennium, societies, economies, and the Earth itself have been subject to disruptions of increasing frequency and severity. While the cause may vary – a pandemic, a geopolitical rupture, or a financial crisis – the outcomes are overlapping: uncertainty, dislocation, and long-lived economic aftershocks. Institutions must be the shield, and leaders the steady hand.

The Leadership Imperative: Move Before the Storm

European business leaders cannot wait for clarity from Washington, Brussels, or Frankfurt. The only viable strategy is proactive adaptation. This means reassessing assumptions, revalidating priorities, and reallocating capital with the expectation that the next 12 to 24 months will bring higher volatility, not less. The temptation will be to wait, to see if the US economy rebounds, or if political rhetoric cools. But waiting is no longer a neutral strategy, it’s a liability.

Business risk is no longer just about geopolitical flashpoints or cyber threats—it’s the cumulative impact of economic volatility, political unpredictability, and regulatory shocks,” said Dominic Bowen, Head of Strategic Advisory at 2Secure. “European executives must prioritize clarity of purpose, capital discipline, and strategic agility. The next 18 months won’t reward the cautious—they’ll reward the prepared.

Dominic Bowen, Strategic Advisor and Host of The International Risk Podcast

From Complexity to Control

The convergence of slumping consumer sentiment, aggressive tariff policy, and geopolitical brinkmanship signals a new era of risk for international businesses. For European firms, this isn’t a US problem to monitor. It’s a strategic risk to act on.

The winners in this environment will not be those with the most data, but those who act fastest on what that data implies. Because in a world drifting toward disorder, the only leaders who will thrive are those willing to confront hard truths, move before the storm, and act while others wait