Walmart CEO Doug McMillon says customers are exhibiting ‘stressed behaviors’—and it’s already tanked the company’s valuation by $22 billion

• Walmart’s market cap dropped by $22 billion after news broke Tuesday that consumer confidence in the U.S. plummeted to a 12-year low. CEO Doug McMillon had just said last month he’d noticed “stressed” behavior from consumers who were more budget-constrained.

Consumer confidence is waning—and it’s hurting retailers big and small. It’s even come for the world’s largest retailer, Walmart, which lost nearly $22 billion off its valuation on Tuesday. 

Walmart’s share price dropped about 3% by market close on Tuesday, resulting in its market cap falling to roughly $680 billion. This comes at the heels of mega e-commerce retailer Amazon dethroning Walmart in its quarterly revenue for the first time ever last month. 

Uncertainty about the economy can be partly to blame. Consumer confidence hit a 12-year low amid concerns about tariffs and inflation, the Conference Board reported Tuesday. This was the fourth consecutive month consumer confidence fell. The index fell to 65.2, which is “well below the threshold of 80 that usually signals a recession ahead.”

“Consumers’ optimism about future income—which had held up quite strongly in the past few months—largely vanished, suggesting worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations,” Stephanie Guichard, senior economist at the Conference Board, said in a statement. 

Walmart CEO Doug McMillon had also warned about consumer confidence during a Feb. 27 talk at The Economic Club of Chicago. He noted “budget-pressured” customers were reducing their spending and showing “stressed behaviors.”

"You can see that the money runs out before the month is gone, you can see that people are buying smaller pack sizes at the end of the month," McMillon said.

Walmart declined Fortune’s request for comment.

How consumer confidence affects companies’ bottom line 

Dwindling consumer confidence “is a worrying sign that our economic recovery may be stalling,” WalletHub analyst Chip Lupo said in a statement to Fortune. 

Other consumer-behavior experts warn consumer confidence likely won’t recover quickly.

“While the pain of inflation is hurting many Americans right now, the effect of inflation on your cost of living just compounds over time,” Kelly LaVigne, vice president of consumer insights at insurance company Allianz Life, told Fortune in a statement. “That means inflation will continue to erode your purchasing power, unless you have a long-term strategy to address it.” 

An Allianz Life survey released Tuesday also shows 71% of consumers expect inflation to worsen over the next 12 months, which is up from 60% at the end of 2024. Plus, 75% of surveyed consumers worry new tariffs will increase their living expenses.

Meanwhile, McMillon has appeared to be unconcerned about the effects of Trump-imposed tariffs on consumer goods. 

“Tariffs are something we’ve managed for many years, and we’ll just continue to manage that,” McMillon said during the company’s latest earnings call in February. 

However, Walmart chief financial officer John David Rainey acknowledged during the earnings call there were “still uncertainties related to consumer behavior and global economic and geopolitical conditions.” 

While the retailer posted growth last quarter, the company also announced it expected profit and revenue growth to slow this fiscal year. Upon that news, Walmart’s share price fell 6%. Still, Rainey reiterated uncertainty could change things.

“We don’t want to get out over our skis here,” he said. “There’s a lot of the year to play out. Again, we feel good about our ability to navigate the environment, whether it’s tariffs or other macro uncertainty.”

This story was originally featured on Fortune.com