As consumers’ sentiment continues to deteriorate amid the uncertainty created by the Trump administration, economists forecast a personal income increase of 0.4% for March. But with confidence dropping to 86 points – the lowest in five years, according to the Conference Board’s Consumer Confidence Index released today – concerns remain. Here are five things to watch when the Bureau of Economic Analysis releases its latest Personal Income and Outlays report tomorrow. 

1. Consumers are still cautious about spending.

Although economists expect to see an increase in spending consistent with the retail sales report that came out two weeks ago, which showcased growth of 1.4% after  0.2% in February, consumers are increasingly worried about rising prices, a possible recession,   President Trump’s tariffs,  instability in the stock market, and employment prospects in the coming months.  Surveys show that people are not yet showing concerns about losing their jobs but indicate a softening in hiring. 

2. Saving rates are going up – not a good sign in this scenario.

Tomorrow’s report will include new data on savings rates, which are expected to continue their upward trend. This would indicate that people are choosing to save rather than spend, a reflection of a declining consumer sentiment. That shift could affect economic growth, especially with the fear of tariffs and their possible impact on the economy. 

3. Personal income shows a “decent” increase. 

Economists expect a personal income growth of 0.4%, but much of that income comes from benefits and rental income. “The last few months, we saw decent growth in rental income and in benefits income, and decent but not great wage and salary growth,” said Christopher Low, chief economist at FHN Financial.“So wage and salary growth needs to pick up.” Without stronger wage and salary growth, consumer spending – a key indicator of economic growth – may show a sharp and steady decline.

4. Inflation remains stable. 

Inflation is expected to have stayed flat in March, economists say, so the gain in income is real income earned.  The report will also show the Personal Consumption Expenditures,  the value of goods and services purchased by consumers– the Federal Reserve’s preferred measure of inflation. This report comes out a week before the Fed’s next decision on interest rates on May 7  and a month before its review of the impact of tariffs.

5. First-quarter GDP sheds light on what’s coming.. 

The GDP report comes out tomorrow morning at the same time as the Personal Income report. In the first quarter of the year, economists expect to see a growth of just 0.4%, a significant drop from the 2.4% growth seen in the final quarter of 2024. The uncertainty, consumer sentiment and the overall narrative for the first three months of the year signal economic caution and fears of recession. On Friday, the monthly jobs report will provide an update on how Trump’s economic policies have affected the market since he took office in January.