America’s optimism has started to show signs of strain under the weight of mounting economic pressures. The latest findings from our Bear and Bull survey revealed that bullish sentiment among respondents has slowed to 53.7% — a decline from 58.6% the previous month. This downturn is linked to growing concerns over tariff policies, inflation, and federal spending cuts, which have caused consumer confidence to plummet to its lowest level since 2021.

• Despite the S&P 500 demonstrating resilience by climbing in 8 of the past 12 months, its index fell 1.43% in February, while the tech-heavy Nasdaq-100 saw a 0.53% surge over the same period.
• The US economy’s resilience is being tested as uncertainty clouds the horizon, with GDP growth moderating to 2.3% in Q4 2024 from 3.1% in the previous quarter.

Forward-looking: Morgan Stanley projects that the new tariffs could push inflation up by 0.6 percentage points while potentially dragging down real consumer spending by up to 2 percentage points. The combined impact might slash inflation-adjusted economic growth by as much as 1.1 percentage points. Meanwhile, the Federal Reserve appears more focused on inflation risks than growth concerns, suggesting interest rate cuts may remain on hold — leaving businesses and consumers waiting longer for relief from high borrowing costs.