A finance guru warns ‘boom times’ for the American economy are a long way off, despite Donald Trump’s claims about his tariffs.

Fox Business Network host Charles Payne pointed to ‘shocking’ falls in consumer spending and confidence in recent figures.

Trump’s tariffs and sweeping government job cuts darkened consumers’ mood and may be weighing on an otherwise mostly healthy economy.

Data showed that consumers slashed their spending by the most since February 2021, even as their incomes rose.

Americans cut their spending by 0.2 per cent in January from the previous month, the Commerce Department said, likely in part because of unseasonably cold weather. 

Yet the retreat may be hinting at more caution by consumers amid rising economic uncertainty.

Consumer confidence also plummeted in February, sinking seven points to 98.3 from January’s 105.3 – the steepest decline in more than four years. 

The drop, measured on The Conference Board’s closely watched index, was far worse than economists projections of 103.  

The seven-point dip was the biggest month-to-month decline since August 2021.

‘Boom times’ for the American economy are a long way off, despite Donald Trump’s claims about his tariffs, economists warn

Credit card spending released by Bank of America was also down, which particularly worried Payne.

‘A couple of days ago, Bank of America came out with their credit card data, and it was scary. I mean, a shocking decline in restaurants, airlines, lodging,’ he said on Fox Business on Friday morning.

‘Just look at the most recent poll on people who say they’re going to go traveling in the next few months, and it’s plunged.

‘I think the boom times are over. All the free money has been spent.’

Payne urged the Federal Reserve to lower interest rates to give consumers enough confidence to spend money and keep the economy going.

‘This is why I have a problem… with the Federal Reserve and interest rates, because if they look at aggregate data, it looks great,’ he said.

‘But the problem is 10 per cent are doing 50 per cent of the buying. And everyone else is struggling because of higher rates. It’s a no-win situation.’

Santander chief US economist Stephen Stanley earlier told AP the chaos in Washington was dominating what consumers saw about the economy.

‘The roller coaster of news headlines emanating from Washington DC is likely going to push businesses to the sidelines for a time and even appear to be impacting consumers,’ he said.

Fox Business Network host Charles Payne pointed to ‘shocking’ falls in consumer spending and confidence in recent figures

Inflation declined to 2.5 per cent in January compared with a year earlier, down from 2.6 percent in December, the Commerce Department said. 

Excluding the volatile food and energy categories, core prices dropped to 2.6 per cent, the lowest since June, from 2.9 per cent.

Economists noted that inflation would likely keep cooling, but the progress could be upended by tariffs. 

Trump said he would impose 25 percent duties on imports from Canada and Mexico, though just 10 percent on oil from Canada. He also said he wanted to double the current tariff on imports from China to 20 percent.

Trump is also calling for widespread layoffs of federal workers, which could cause hundreds of thousands of job losses and potentially lift the unemployment rate.

One bright spot in the report was that incomes jumped 0.9 per cent in January from December, fueled in part by a large annual cost of living adjustment for Social Security beneficiaries.

Yet Americans spent less anyway, in particular on cars, where purchases fell sharply. 

The cutbacks may also reflect a need for many consumers to save after spending a bit during the winter holiday season. Credit card debt surged in December, economists noted.

Big Lots Store in Blaine, Minnesota, which is closing down. Americans cut their spending by 0.2 per cent in January from the previous month

A big concern right now is whether tariffs will push up inflation, or slow the economy, or – in a particularly toxic combination – both.

A report from the Federal Reserve’s Boston branch this month concluded that 25 per cent tariffs on Canada and Mexico, along with Trump’s initial 10 import taxes on China, could lift core inflation by as much as 0.8 percentage points.

As for consumer confidence, The Conference Board’s survey respondents voiced growing concerns about persistent inflation and the increasing likelihood of a global trade war, fueled by Trump’s tariff policies. 

Trump’s first inflation report came in hotter than expected – putting pressure on the Fed to keep interest rates steady despite Trump’s calls for cuts. 

Meanwhile, the share of consumers bracing for a recession over the next year surged to a nine-month high, Tuesday’s report showed. 

The consumer confidence index measures both Americans’ assessment of current economic conditions and their outlook for the next six months.

Consumer spending accounts for about two-thirds of US economic activity and is closely watched by economists for signs about how the American consumer is feeling.

The report found that the measure of Americans’ short-term expectations for income, business and the job market fell 9.3 points to 72.9. 

Consumer confidence also plummeted in February, sinking seven points to 98.3 from January’s 105.3 – the steepest decline in more than four years

The Conference Board says a reading under 80 can signal a potential recession in the near future.

Experts said this pull back in consumer confidence was largely down to the new administration’s economic policies. 

The Conference Board noted that ‘comments on the current administration and its policies dominated the responses’ to its survey this month.  

‘Consumers became pessimistic about future business conditions and less optimistic about future income,’ the group wrote. 

‘Pessimism about future employment prospects worsened and reached a ten-month high.’