Investment bank Jefferies downgraded its ratings for major airlines including Delta and American Airlines, leading to significant stock declines. Analysts cite soft consumer and corporate sentiment amid macroeconomic uncertainties, reflected in a 12-year low for the US Consumer Expectations Index at 65.2 points. This decline signals potential recession fears fueled by inflation concerns and federal tariffs. Consumers are cutting back on expenditures like travel, with a notable drop in spending reported by Bank of America. Additionally, United Airlines reported diminished government travel revenue following job cuts related to policy shifts.
"Corporate and consumer sentiment [are expected] to remain soft on swelling macro uncertainty," said analyst Sheila Kahyaoglu, indicating a concerning outlook for the airline industry.
The most recent reading for the US Consumer Expectations Index hit its lowest level in 12 years at 65.2 points, suggesting looming recession pressures.
According to Senior Economist Stephanie Guichard, "consumers' optimism about future income has largely vanished," signaling deepening economic anxiety among Americans.
United's CFO Mike Leskinen highlighted a drop in government travel post-inauguration, mentioning that layoffs contribute to a severe impact on revenues from government contracts.
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