Topline
The consumer confidence index “collapsed” to its lowest point in more than a decade, the Conference Board think tank reported Tuesday, as pessimistic views of the economy and labor market appeared to spread among Americans.
An earlier survey of Americans found consumers had grown more optimistic about the economy.
Los Angeles Times via Getty ImagesKey Facts
The consumer confidence index, a measurement of how optimistic or pessimistic Americans feel about the economy, dropped to 84.5 in January from December’s revised-up reading of 94.2, down from a 100-point baseline set in 1986 and the measurement’s lowest level since May 2014 (82.2).
That falls well below Wall Street’s estimates of 91.1, according to FactSet.
Consumers’ views about current business conditions worsened through the month, with 17.9% of respondents indicating conditions were “good,” down from 19.8% in December, and 17.8% said conditions were “bad,” up from 17.6%.
Views of the labor market also deteriorated, as 23.9% of consumers said jobs were “plentiful,” down from 27.5% in December, and 20.8% said jobs were “hard to get,” up from 19.1% and the highest since February 2021.
How Do Americans Feel About The Future?
Fewer Americans believe their incomes will increase over the next six months, and even more expect fewer jobs to be available, according to the Conference Board. About 15.6% of consumers expect business conditions to improve, down from last month’s reading of 18.7%, and 22.9% expect conditions to worsen, up from 21.3%. Consumers appeared more cautious about plans for buying big-ticket items, such as cars and household appliances, and planned spending on services like health care and personal care also declined.
Crucial Quote
“Confidence collapsed in January, as consumer concerns about the present situation and expectations for the future deepened,” said Dana Peterson, the Conference Board’s chief economist. Peterson added write-in responses for the survey “continued to skew toward pessimism,” as consumers referenced rising prices, especially for oil, gas and groceries, as well as increased health care costs.
What To Watch For
The Federal Reserve concludes its latest policymaking meeting on Jan. 28, though traders have priced in odds of just 2.8% of interest rates lowering from a range of 3.5% to 3.75%, according to CME’s FedWatch tool.
Key Background
Concerns about the labor market and inflation have persisted in recent months, with more Americans pointing to rising costs and declining finances. The University of Michigan’s consumer sentiment report, which reflects Americans’ views on personal finance and the cost of living, showed economic optimism rose to a five-month high in January, though it remained near a historic low. Joanne Hsu, director of the survey, said consumers reported “pressure on their purchasing power” stemming from higher prices and the “prospect of weakening labor markets.”
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