Consumer confidence down sharply in February
Consumer confidence in February registered the biggest monthly decline since August 2021 amid growing inflation and job market fears.
The Conference Board Consumer Confidence Index declined for the third consecutive month in February, falling by 7.0 points to 98.3. The Present Situation Index — based on consumers’ assessment of current business and labor market conditions — fell 3.4 points to 136.5. The results are in line with the University of Michigan’s Index of Consumer Sentiment, which declined for the second consecutive month in February.
In addition, 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 that usually signals a recession ahead.
Views of current labor market conditions weakened, and consumers became pessimistic about future business conditions and less optimistic about future income, noted Stephanie Guichard, senior economist, global indicators at The Conference Board.
“Pessimism about future employment prospects worsened and reached a ten-month high,” she said.
Consumers’ perceived likelihood of a U.S. recession over the next 12 months also rose in February.
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, with the increase likely reflecting a mix of factors, including sticky inflation, the recent jump in prices of key household staples like eggs and the expected impact of tariffs, according to Guichard.
“References to inflation and prices in general continue to rank high in write-in responses, but the focus shifted towards other topics,” she said. “There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019. Most notably, comments on the current Administration and its policies dominated the responses.”
Specifics from the February report are below.
Present Situation
Consumers’ assessments of current business conditions improved slightly in February.
- 19.6% of consumers said business conditions were “good,” up from 18.5% in January.
- 15.7% said business conditions were “bad,” up from 15.2%.
Consumers’ views of the labor market were less positive in February.
- 33.4% of consumers said jobs were “plentiful,” down from 33.9% in January.
- 16.3% of consumers said jobs were “hard to get,” up from 14.5%.
Expectations Six Months Hence
Consumers’ outlook for business conditions turned negative in February.
- 20.2% of consumers expected business conditions to improve, down from 20.8% in January.
- 26.7% expected business conditions to worsen, up from 19.6%.
Consumers’ pessimism about the labor market outlook worsened.
- 18.4% of consumers expected more jobs to be available, down from 19.1% in January.
- 25.9% anticipated fewer jobs, up from 21.0% in January.
Consumers were less optimistic about their income prospects in February.
- 18.2% of consumers expected their incomes to increase, a slight uptick from 18.1% in January.
- But 13.7% expected their incomes to decrease, up from 12.3%.
The monthly Consumer Confidence Survey, based on an online sample, is conducted for The Conference Board by Toluna, a technology company that delivers real-time consumer insights and market research.
The cutoff date for preliminary results was Feb. 19, 2025.
