The threat of tariffs and their potential impact on the global economy are weighing on consumer and business sentiment around the world. In the US, small business sentiment declined in February to its lowest level in four months. In Canada, consumer confidence dropped again last week, with the threat of tariffs deteriorating consumers’ outlook for the Canadian economy. Weak consumer and business optimism could cause spending cutbacks, which could hinder overall economic activity.

• In the US, the NFIB Small Business Optimism Index fell to 100.7 in February from 102.8 in the previous month, which was its lowest level since October 2024. Tariffs are a big concern among small businesses and are weighing on their capital spending and expansion decisions.
• Uncertainty among business owners is hovering near an all-time high. Fewer business owners expect business conditions to be better in the next six months. Many small businesses plan to raise prices, due in part to still elevated inflationary pressures and expectations that tariffs could push prices even higher.
• US consumer confidence is also deteriorating. The University of Michigan Consumer Sentiment Index showed consumer confidence fell to its lowest level since November 2023 in February.
• Consumer confidence hasn’t fared much better in Canada. The Bloomberg Nanos Canadian Confidence Index dropped again over the week ended March 7. Consumers cited concerns over the strength of the Canadian economy over the next six months.
• Trade and economic uncertainty will likely weigh on the Bank of Canada’s interest-rate decision, which takes place today.

Trade and economic uncertainty are weighing on consumer and business activity, which has impacted global equity markets this week. Canadian equities have fallen over 2%. Interest rates are expected to go down today, which could provide a bit of support for households and businesses here in Canada amid trade tensions.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.