Top 9 warning signs the economy's in trouble: What that means for you

Yahoo

25-04-2025

HONOLULU (KHON2) — If you feel more worried about money than you did last year, you're not alone. A new report shows that Americans are losing confidence in the economy, their wallets and even their future.
According to a new study on the Economic Index, consumer confidence dropped nearly 8% between April 2024 and April 2025. That means more people are stressed about their finances, less likely to make big purchases and more uncertain about what lies ahead.
This isn't just about numbers. It's about how people are living day to day, what they're buying, what they're skipping and how hopeful they feel.
'We're seeing a real slowdown in how people feel about their money,' said Chip Lupo, an analyst from the study. 'That can hurt the economy in a big way.'
The index is based on how people answer questions about things like jobs, debt, spending and savings. And this year, those answers show a clear pattern: less confidence, more stress.
So, what exactly is going on? And what should you watch for? Here are the top things to know about the latest drop in consumer confidence.
When confidence drops, so does spending, especially on big-ticket items. Consumers are thinking twice before committing to major expenses like cars, home renovations or electronics.
Even necessary upgrades are being delayed. With economic uncertainty looming, people are prioritizing essentials and holding on to their cash. This pullback in spending can create a ripple effect that slows down businesses and weakens the broader economy.
Whether it's a car, a new appliance or a dream vacation, people are backing away from spending on these big-ticket items. The likelihood of making a large purchase dropped nearly 10% this year.
Auto-buying plans dropped even more by 13.4% lower than last year. That's a big deal for industries that rely on consumer demand to grow, especially when combined with falling home-buying interest, the tariff war that's tanking the economy and economic retaliation both from within and without the United States.
The percentage of people who plan to buy a home in the next six months dropped by more than 10%. That reflects a tough market that includes high prices, interest rates and uncertainty make people hesitate.
Even though some real estate markets are seeing more listings or price adjustments, the emotional math of buying a home just doesn't add up for many.Optimism about personal finances in the next six months dropped 4.5%. That means more people expect their money situation to stay the same or get worse rather than improve.
This might explain why people are avoiding debt, skipping big purchases and cutting back where they can.
Stress about money went up 1.8% since April 2024. That might not seem like a huge jump, but it reflects a steady climb and adds up over time.
When people feel anxious about their financial security, they may delay everything from home repairs to healthcare to school payments. It can make life feel like it's on hold.
Confidence in debt reduction fell by 3.9%. If fewer people believe they'll reduce their debt in the next six months, it could be a sign that many are already stretched thin.
Paying off debt takes extra income, discipline and a stable outlook. But if prices are high and incomes feel uncertain, that hope starts to fade.
The share of people who think their credit score will go up in the next six months dropped by 2.8%. That's important, because a good credit score opens the door to better loan terms, lower interest rates and more opportunities.
This drop may signal that people expect to use credit more or fall behind on payments.
Not all of the news is gloomy. A few areas in the report index show improvement. More people (+0.7%) say they're confident they'll have a job in six months.
And even more (+3.7%) feel there are 'abundant' job opportunities right now. That could help keep the economy moving if wages and job quality match people's needs.
Oddly, some people feel slightly more positive about their finances right now compared to a year ago. That's a 0.9% uptick, but it doesn't match the bigger drop in future optimism.
It's like standing on a shaky bridge: you're still standing, but you don't know if you'll get across.
The study's Index isn't just about feelings. It tracks how likely people are to spend, save, invest and borrow. And when those numbers dip, it affects everyone.
When confidence goes down, so does spending. And when spending slows, businesses feel it. They may hire less, produce less or even cut back; and this continues a cycle that makes people even more cautious.
A nearly 8% drop in consumer confidence doesn't scream panic, but it's a red flag. The economy is built on people feeling secure enough to take financial risks. Right now, more people are pulling back.
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How they feel next month, or six months from now, could shape what happens next and not just in the market, but in everyday life for millions of families across the country.
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