U.S. consumer confidence drops in February
The Conference Board announced its Consumer Confidence Index declined by 7.0 points in February to 98.3 (for reference, 1985=100), the sharpest one-month drop in confidence since August 2021.
The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, fell 3.4 points to 136.5. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, dropped 9.3 points to 72.9. For the first time since June 2024, the Expectations Index was below the threshold of 80, which usually signals a recession ahead.
“In February, consumer confidence registered the largest monthly decline since August 2021,” says Stephanie Guichard, senior economist of global indicators at The Conference Board. “This is the third consecutive month-on-month decline, bringing the Index to the bottom of the range that has prevailed since 2022. Of the five components of the Index, only consumers’ assessment of present business conditions improved, albeit slightly. Views of current labor market conditions weakened. Consumers became pessimistic about future business conditions and less optimistic about future income. Pessimism about future employment prospects worsened and reached a ten-month high.”
According to The Conference Board’s latest reporting, February’s fall in confidence was shared across all age groups but was deepest for consumers between 35 and 55 years old. The decline was also broad-based among income groups, with the only exceptions among households earning less than $15,000 a year and between $100,000–125,000.
“Average 12-month inflation expectations surged from 5.2% to 6% in February,” Guichard says. “This increase likely reflected a mix of factors, including sticky inflation but also the recent jump in prices of key household staples like eggs and the expected impact of tariffs.”
She states that high-ranking write-in responses refer to inflation and prices in general, and there was an increase in trade and tariff mentions. “Most notably, comments on the current Administration and its policies dominated the responses,” Guichard adds.
