America’s Confidence Crisis: Why Families Are Pulling Back—and How Policy Is Making Life Unaffordable

Originally published on Substack. 

Consumer confidence does not collapse because Americans become suddenly pessimistic. It collapses when life gets harder, affordability shrinks, and policymakers make choices that compound the problem.

That’s precisely what the latest shutdown-delayed data show.

The Conference Board reported that consumer confidence plunged to 88.7 in November, a steep drop from 95.5 just a month prior.

According to the Wall Street Journal’s analysis of retail sales and confidence declines, this drop reflects the financial reality American households face heading into the holiday season.

Retail sales rose only 0.2% in September, missing expectations, while consumers sharply reduced purchases of vehicles, electronics, and clothing—three categories heavily exposed to tariffs and trade distortions. Meanwhile, discount and value retailers such as Walmart, TJX, and Burlington are surging because households are trading down, not trading up.

That is not consumer strength. It’s consumer stress.

Why Families Are Losing Confidence

The decline in confidence is predictable when you understand the pressures squeezing families:

• Sticky inflation still eroding purchasing power
• Higher borrowing costs due to tight credit and elevated rates
• Tariffs raising prices on everything from cars to appliances
• A slowing labor market, with ADP reporting private employers shed 13,500 jobs per week in late October and early November
• Producer prices up 0.3%, adding cost pressure before goods even reach consumers
• Fading household savings after years of inflation

Families feel it in their grocery bills, rent, car payments, and everyday essentials. Lower-income households especially are signaling distress—precisely the people protectionist and populist policies claim to defend.

This is the core economic story of late 2025: Americans are working harder, paying more, and feeling less secure. And the policies coming out of Washington are not helping—they’re making everything more expensive.

Sticky Inflation Is Not a Mystery—It’s a Policy Failure

Inflation remains stuck around 3%. That is not catastrophic, but it is stubborn—and preventable. Inflation persists when policymakers champion the very choices that keep prices high:

• too much money printing by the Federal Reserve
• excessive federal spending (which I’ve long warned about in my work on fiscal sustainability)
• protectionist tariffs that raise input and consumer prices
• industrial policy that subsidizes favored industries while distorting supply
• regulatory bottlenecks that restrict production and competition
• energy mandates that restrict affordable supply

We cannot demand lower prices while implementing policies that raise them. Economics still applies—even when political narratives try to override it.

The Labor Market Is Softening—and Tariffs Aren’t Helping

The ADP data for the private sector reveal employers are pulling back on hiring. That’s not simply a cyclical slowdown. It’s the predictable result of higher costs created by protectionism and inflationary policy.

When protectionist tariffs raise production costs, businesses respond by:

• delaying new hires
• reducing hours
• cutting investment
• or laying off workers

These effects show up in the job numbers before they appear in wages or growth. A weakening labor market combined with rising prices is exactly the environment that destroys confidence.

Protectionism Is Quietly Taxing American Families

This newsletter is not about tariffs alone—but any honest explanation of the affordability crisis must address them. They are acting as a hidden tax on families.

Categories with the steepest spending declines—vehicles, clothing, electronics—are also the categories most exposed to tariffs. When tariffs raise the cost of inputs, manufacturers raise prices. Consumers delay purchases. Retailers feel the slowdown. Workers suffer the consequences.

And politically, voters notice. They may not know the economics, but they know when life gets more expensive.
A true pro-growth agenda doesn’t raise the cost of living. It lowers it.

A Pro-Growth Agenda Requires More Freedom

If Trump and Washington want to restore confidence and affordability, the path is clear and grounded in the principles I’ve highlighted for years in my research on economic freedom and prosperity:

• lower spending and taxes
• more trade and competition
• end tariffs
• regulatory streamlining
• policies that increase supply, not restrict it
• predictable rules that encourage investment

These aren’t abstract principles. They are the ingredients of affordability.

Lower prices.

More opportunity.

Better jobs.

Stronger growth.

Higher confidence.

These are the outcomes people feel—not talking points.

Confidence Falls When Government Costs Rise

Consumer confidence is collapsing because families are living with the consequences of bad policy choices. Inflation remains elevated. Prices are too high. Job creation is slowing. And protectionist barriers quietly raise the cost of living while pretending to defend American workers.

If President Trump wants a truly pro-growth platform, the solution is not more tariffs and more government intervention. The solution is the same one that built American prosperity: free trade, free markets, strong supply, and less government interference.

Confidence rises when people feel empowered—not cornered. Prosperity grows when prices fall—not rise. Opportunity expands when competition increases—not contracts.

If we want stronger families, a stronger economy, and a stronger future, the formula is timeless: more liberty, less government—and a firm rejection of policies that make life less affordable.

That is how we let people prosper!