Consumer confidence plummeted in January, surpassing the lows from the pandemic era and hitting its lowest point since 2014, according to the latest numbers from the Conference Board.
The Consumer Confidence Index fell 9.7 points this month, down to 84.5 from an upwardly revised 94.2 in December. December’s result, while initially reported as a decline, ended with a slight increase after a 5.1-point revision.
The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, and the Expectation Index, consumers’ short-term outlook on business and labor market conditions, also saw steep drops of their own. The Present Situation Index fell 9.9 points to 113.7 and the Expectations Index dropped 9.5 points to 65.1 – a number well below the 80-point mark that tends to signal recession.
“Confidence collapsed in January, as consumer concerns about both the present situation and expectations for the future deepened,” said Dana M. Peterson, chief economist at the Conference Board. “All five components of the Index deteriorated, driving the overall Index to its lowest level since May 2014 (82.2) — surpassing its COVID-19 pandemic depths.”
The dip in confidence was felt across all generations this month, though Gen Z remained the most optimistic, according to the report. Write-in responses continued to note tariffs and inflation as rising concerns.
“Consumers’ write-in responses on factors affecting the economy continued to skew towards pessimism,” Peterson said. “References to prices and inflation, oil and gas prices, and food and grocery prices remained elevated. Mentions of tariffs and trade, politics, and the labor market also rose in January, and references to health/insurance and war edged higher.”
Consumers appear cautious when it comes to spending on big-ticket items over the next six months, the report shows, with more responders checking “no” instead of “yes” or even “maybe” when it comes to big purchase. Plans to buy furniture, appliances and electronics all decreased, with the exception of smartphones.
Here are a few additional points from this month’s report:
Present Situation
Consumers’ views of current business conditions worsened in January.
- 17.9 percent of consumers said business conditions were “good,” down from 19.8 percent in December.
- 17.8 percent said business conditions were “bad,” up slightly from 17.6 percent.
Consumers’ views of the labor market were also weaker in January.
- 23.9 percent of consumers said jobs were “plentiful,” down from 27.5 percent in December.
- 20.8 percent of consumers said jobs were “hard to get,” up from 19.1 percent.
Expectations Six Months Hence
Consumers were more pessimistic about future business conditions in January.
- 15.6 percent of consumers expected business conditions to improve, down from 18.7 percent in December.
- 22.9 percent expected business conditions to worsen, up from 21.3 percent.
Consumers were also more concerned about the labor market outlook in January.
- 13.9 percent of consumers expected more jobs to be available, down from 17.4 percent in December.
- 28.5 percent anticipated fewer jobs, up from 26.0 percent.
Consumers’ outlook for their income prospects was less positive in January.
- 15.7 percent of consumers expected their incomes to increase, down from 18.8 percent in December.
- However, 12.6 percent expected their incomes to decline, down from 13.0 percent.
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