| Consensus | Consensus Range | Actual | Previous | Revised | |
| Index | 90.0 | 87.0 to 92.7 | 84.5 | 89.1 | 94.2 |
Highlights
U.S. consumer confidence resumed its downward spiral after a short-lived rebound in December, as concerns about current economic conditions as well as rising negative sentiment regarding future employment and income prospects continue, with inflation and concerns about finances top of mind.
The Conference Board's Consumer Confidence Index declined by more than expected in January to 84.5, down from a revised 94.2 (previously 89.1) in December, and falling significantly short of expectations for 90.0 in the Econoday survey of forecasters.
Consumers' assessment of current business and labor market conditions turned sour, while retaining their very pessimistic short-term outlook for income, business, and labor market conditions which remains stuck well below the threshold that indicates a recession ahead.
Confidence collapsed in January, as consumer concerns about both the present situation and expectations for the future deepened, the report said. 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.
Price inflation in multiple categories, tariffs and trade, politics, and the labor market saw the most mentions.
Consumers' views of their current financial situations improved slightly in January, after revising up December's plunge into negative territory to a small net positive. However, expectations for their 'Family's Future Financial Situation' were again less positive in January after rising in December.
Average one-year inflation expectations remained at 5.7 percent in November from October. Consumers' average 12-month inflation expectations bounced up, but the median fell further.
The Conference Board also said the share of consumers expecting a recession over the next 12 months rose back up in January, while the share of those who believe the economy is already in a recession rose for the six straight month.
On a six-month moving average basis, consumers appeared more cautious about plans for buying big-ticket items. Future demand for new cars continued to falter but plans to buy used cars climbed higher. Home purchase plans continue to fall, while plans to purchase refrigerators, dishwashers, furniture, and TVs decreased. Plans to buy electronics dipped in all categories except smartphones.
Plans to purchase services in the coming months were weaker in January. The consumer spending shift in 2025 towards cheap thrills and necessary services spilled over into the new year.
Market Consensus Before Announcement
Confidence expected off the lows at 90.0 for January versus 89.1 in December. The University of Michigan survey showed a bounce in sentiment and the Conference Board report is expected to follow suit. The relatively low confidence levels reflect ongoing consumer angst over inflation and job security.
Definition
The Conference Board's confidence report surveys consumers on their assessments of the labor market, business activity, and their own financial conditions. The survey is conducted by Toluna, an online community platform. (Conference Board and Toluna)
Description
The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.
This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer confidence index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.
Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.