CNBC Daily Open: U.S. consumers are feeling bad and expect inflation to spike

The U.S. consumer hasn’t felt so glum about the economy since November 2022, according to a survey by the University of Michigan. That’s when annual inflation was at 7.1% and Federal Reserve Chair Jerome Powell acknowledged that the chances of a soft landing — where inflation is tamed without the economy slipping into recession — has narrowed.

With U.S. inflation at 2.9% in December and gross domestic product expanding an annualized 2.3% during the fourth quarter last year, it seemed like the Fed was, in fact, going to steer the economy safely down the landing strip.

But turbulence, in the form of President Donald Trump’s tariffs, is rocking the plane in 2025. Consumers now expect one-year inflation to jump to 4.9%, the same survey showed. Adding to woes, U.S. Treasury Secretary Scott Bessent said Sunday there are “no guarantees” there won’t be a recession.

Stocks bounced on Friday, but that was probably because investors were relieved by the lack of tariff news than optimism about the markets. Like on Main Street, the sentiment in Wall Street is decidedly downbeat.

Dead cat bounce?
U.S. markets bounced Friday. The S&P 500 added 2.13%, the Dow Jones Industrial Average rose 1.65% and the Nasdaq Composite jumped 2.61%. However, the three benchmarks posted weekly losses, with the S&P losing $5.28 trillion in around three weeks. Asia-Pacific markets rose Monday. Japan’s Nikkei 225 rose around 1.2% even as yields on long-term government bonds touched highs ahead of the Bank of Japan’s meeting later this week.

Gloomy about the economy
The University of Michigan’s Survey of Consumers posted a mid-March reading of 57.9 for its consumer sentiment index, a 10.5% decline from February and below the Dow Jones consensus estimate for 63.2. The one-year inflation outlook spiked to 4.9%, the highest reading since November 2022. “Many consumers cited the high level of uncertainty around policy,” Joanne Hsu, the survey’s director, said.

‘No guarantee’ of avoiding recession
U.S. Treasury Secretary Scott Bessent said on NBC’s “Meet the Press” Sunday the Trump administration is “resetting” the government’s books and in so doing preventing a financial crisis. But Bessent also pointed out that there are “no guarantees” the administration’s actions won’t result in a recession. On the stock market correction, Bessent said “they’re normal” and that he’s “not worried about the markets.”

Growing consumption in China
Chinese retail sales rose by an expected 4.0% in the January-February period from a year ago, according to data published Monday by the National Bureau of Statistics. Industrial production climbed 5.9% in the first two months of 2025, compared with a year earlier, beating expectations. On Sunday, China announced a “Special Action Plan to Boost Consumption” in a bid to boost domestic consumption and revitalize the stock market.

Klarna files for IPO
Swedish firm Klarna, a provider of buy now, pay later loans, filed its IPO prospectus on Friday, and plans to go public on the New York Stock Exchange under the ticker symbol KLAR. Klarna hasn’t disclosed the number of shares to be offered or the expected price range. The decision to go public in the U.S. is a significant blow to European stock exchanges, which have struggled to retain homegrown tech companies.

[PRO] Data on U.S. economy
The U.S. retail sales report for February, out Monday, will confirm if plunging consumer sentiment has translated into diminishing sales — as CEOs of retail companies are warning. While market watchers don’t expect the U.S. Federal Reserve meeting, which will conclude on Wednesday, to result in a rate cut, they will listen closely to Chair Jerome Powell’s comments on the state of the economy.

How the U.S. is losing ground to China in nuclear fusion, as AI power needs surge

China and the U.S. are in a race to create the first grid-scale nuclear fusion energy. After decades of the U.S. being at the top of the leaderboard, China is catching up by spending twice as much and building projects at record speed.

Often called the holy grail of clean energy, nuclear fusion creates four times more energy per kilogram of fuel than traditional nuclear fission and 4 million times more than burning coal, with no greenhouse gasses or long-term radioactive waste.

There’s just one big problem. 

“The only working fusion power plants right now in the universe are stars,” said Dennis Whyte, professor of nuclear science and engineering at Massachusetts Institute of Technology.