Senior Fed Official: This is the biggest blow to confidence I can remember during my ten years at the Fed, except for the outbreak of the pandemic in 2020.

The consumer confidence index of the University of Michigan in the US plummeted in April due to the impact of tariffs. Senior Fed officials frankly stated that it was the biggest blow to confidence since the outbreak of the pandemic in March 2020, and expressed that a rapid resolution of the tariff issue would help alleviate concerns about an economic recession.

On April 13th local time, Neel Kashkari, the 2026 FOMC voter and President of the Minneapolis Federal Reserve, warned during an interview with CBS News that the uncertainty caused by the trade war has severely impacted consumer confidence. Kashkari stated:

"This is the most severe blow to confidence I have seen during my ten years at the Federal Reserve, aside from the initial stage of the pandemic in March 2020."

When confidence suffers such a severe blow, it may have a huge impact on the economy."

As mentioned earlier by Wall Street Intelligence, the consumer confidence index of the University of Michigan in the US fell to its lowest level since June 2022, also the second lowest value in the history of this survey since 1952. Joanne Hsu, director of the University of Michigan Consumer Survey, said that consumers reported multiple warning signs, which exacerbated the risk of an economic recession.

Kashkari also particularly emphasized that the decline in consumer confidence was especially concerning. This change in sentiment is usually a leading indicator of deteriorating economic prospects and can potentially produce a chain reaction in the stock market, bond market, and real estate market.

This Is a Very Grave Situation

When CBS News host Margaret Brennan asked, "JPMorgan CEO Jamie Dimon said there was a 50% possibility of a recession, and Goldman Sachs put the probability at 45%. Do you think the risk is so high?" Kashkari replied:

"This will actually depend on how quickly the (trade) issue can be resolved. The faster it is resolved, the quicker confidence can recover, and hopefully these (recession) probabilities can decrease."

Kashkari warned, "This is a very grave situation, and the situation is extremely unstable." He further explained:

Even without considering the direct impact of the tariffs themselves, if businesses and consumers become nervous and reduce spending due to uncertainty, it could lead to an economic recession.

He also said, "There are many issues to address now, and we are doing our utmost to grasp the situation."

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