United States President Donald Trump has spooked global markets on the back of his tariffs campaign. This was recently extended to hit all steel and aluminium imports with 25% duties.
Trump has also said tariffs on automobiles, semiconductors, and pharmaceuticals could come as early as April 2, with a rate of around 25%.
Ranchhod said financial pressures also continue to be a big concern for many households.
“While inflation is now finally back close to 2%, many of us are still grappling with the big increases in living costs over the past few years that have eaten away at our spending power.
“Furthermore, we’re still seeing large increases in the cost of essentials like food and local council rates.
“In the face of that ongoing squeeze on their spending power, it’s no surprise that many households still feel like they’re going backwards.”
Despite the recent drop, household confidence levels have been trending higher over the past year, Ranchhod said.
“Since mid-2024 there have been some big drops in interest rates. That signals a boost to many households’ disposable incomes over the coming months, and it will support a gradual recovery in economic growth and the labour market over 2025,” he said.
But Ranchhod emphasised the key word was ‘gradual’.
“As this recent fall in economic confidence highlights, there are a range of concerns that are still worrying New Zealand households, and that’s likely to constrain spending for a few more months at least.”
The Reserve Bank has announced 175 basis points in cuts to the Official Cash Rate since July last year, with more expected in the coming months.
Ranchhod said the level of confidence continues to vary significantly among regions.
“Confidence is in the doldrums in Wellington, with financial headwinds and a tightening-up of public spending key concerns for many households. In contrast, households are more optimistic in regions that have a strong rural backbone or tourism ties, especially in the lower South Island.”
Confidence dropped across all age groups with those aged 30-49 sinking 16.8 points to 86.5.
Younger people aged 18-29 remain the most confident with an index score of 100.5 – a drop of 5.7 points.
Those aged 50-plus fell 3.2 points to 85.7.
The level of pessimism increased across all demographic groups, with men’s confidence dropping considerably in the March quarter from 11.3 points to an index score of 97.3.
Confidence amongst women fell by 5.8 points to 81.4.
Cameron Smith is an Auckland-based journalist with the Herald business team. He joined the Herald in 2015 and has covered business and sports. He reports on topics including retail, small business, the workplace and macroeconomics.
