Consumers Are Worried, But This AI Shift Is Just Starting

In August 2021, Americans were on edge. The Delta variant of COVID-19 had arrived.

This caused consumers to panic a bit, and it showed in the data. The Conference Board’s Consumer Confidence Index fell to 113.8, down from 125.1 in July. That was a steep 9% drop in one month.

Now, it’s happening again – but for very different reasons.

This morning, the Conference Board’s Consumer Confidence Index for February showed a reading of 98.3. That’s down from January’s 105 reading, and economists were looking for a reading of 102.5. Not only that, but it was the third-straight monthly decline for the index.

This is its biggest drop since August 2021.

This didn’t come out of nowhere, either.

On Friday, the University of Michigan’s Consumer Sentiment Survey also plunged. The February reading came in at 64.7, down almost 10% from January’s 71.7.

This also marked a 15-month low. The last time the consumer sentiment survey was this low was in October 2023, when people were grappling with the October 7 terrorist attacks by Hamas in Israel, the U.S.’s ballooning budget deficit and elevated Treasury yields and interest rates.

Now, the reasons for the drop in consumer confidence and sentiment this time around are different. Some of the current consumer pessimism could be weather-related. But the main driver we are seeing this time around is due to tariff threats. The Conference Board noted today that “there was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019.”

The truth is Americans are still feeling the sting of high prices. Even though inflation has cooled from its 2022 peak, it’s still sticking around. Gas, groceries, rent – they’re all more expensive than they were a year ago.

Tariffs threaten to raise the prices of imported goods and reduce consumer demand. So, consumers are on edge that these tariffs might unravel the progress made in bringing inflation down recently.

We already knew that S&P 500 companies are concerned. According to FactSet, more S&P 500 companies are citing “tariff” or “tariffs” on quarterly earnings calls than at any point since Q2 2019. 

But it was Walmart Inc.’s (WMT) earnings report last week really raised the first major red flag that consumers were concerned about tariffs.

So, in today’s Market 360, we’ll take a closer look at Walmart’s earnings and what the company management had to say about tariffs. I’ll also share the important details that investors are overlooking. Not only do they bode well for Walmart’s future, but they highlight a huge shift in companies’ approach to artificial intelligence. I’ll explain what’s shifting… and how you can profit from it.   

Let’s get started.