Consumer confidence tumbled sharply in January, with The Conference Board Consumer Confidence Index® falling 9.7 points to 84.5, its lowest level in more than a decade.
Both current conditions and future expectations weakened, as concerns about jobs, business conditions, and income prospects deepened across all demographics.
Pessimism outweighed optimism, with inflation, prices, politics, and trade increasingly cited as top economic worries by consumers.
Consumer confidence plunged in January, erasing December’s brief rebound and signaling renewed anxiety about the U.S. economic outlook.
The Conference Board said its Consumer Confidence Index dropped to 84.5 (1985=100), down from an upwardly revised 94.2 in December. The January reading marks the lowest level since May 2014 and falls below even the depths reached during the COVID-19 pandemic.
“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.”
Broad-based decline
The decline was broad-based. The Present Situation Index, which reflects consumers’ views of current business and labor market conditions, fell 9.9 points to 113.7. Assessments of business conditions slipped to barely positive territory, while perceptions of job availability weakened further. The labor market differential—the share of consumers saying jobs are “plentiful” minus those saying jobs are “hard to get”—continued to deteriorate.
The Expectations Index dropped 9.5 points to 65.1, far below the threshold of 80 that typically signals a recession ahead. Expectations for business conditions, job availability, and household income six months from now all declined, with views on business and labor market conditions sinking deeper into negative territory.
Confidence weakened across every demographic group. On a six-month moving average basis, sentiment fell for all age and income brackets, though consumers under 35—and Gen Z in particular—remained more optimistic than older generations.
By income, confidence slipped across the board, with households earning less than $15,000 remaining the least optimistic. Confidence also declined among all political affiliations, with Independents recording the sharpest drop.
Gloomy mood
Consumers’ written comments underscored the gloomy mood. References to inflation and prices—especially food, groceries, and oil and gas—remained elevated. Mentions of tariffs and trade, politics, and labor market concerns increased, while references to health insurance and war also edged higher.
Despite a Federal Reserve rate cut in December, consumers remained uneasy. Fewer respondents expected interest rates to be higher a year from now, but inflation expectations were mixed, with the average ticking up even as the median declined. Expectations for stock prices retreated after a brief rise in December.
Household finances offered a mixed picture. Views of families’ current financial situations improved slightly after December’s downward revision, but expectations for future finances turned less positive again. Meanwhile, recession fears persisted: while fewer consumers said a downturn was “somewhat likely” or “not likely,” the share saying a recession is “very likely” or already underway edged higher.
Cautious spending
Caution also showed up in spending plans. Fewer consumers said they planned to buy big-ticket items over the next six months, while “maybe” and “no” responses increased.
Auto buying plans were mixed—expectations for new car purchases weakened, but interest in used cars rose. Homebuying intentions continued to fall, and plans to purchase appliances, furniture, and TVs declined. Smartphones remained the lone bright spot in electronics.
Planned spending on services also softened, though not uniformly. Restaurants, bars, and takeout remained the top spending category and continued to rise.
Consumers also reported stronger intentions to spend on travel-related services such as hotels, airfare, and motor vehicle services—an unexpected development given the sharp decline in reported vacation plans, particularly for domestic travel.