Consumer Confidence Falls to 84.5, Its Lowest Level Since May 2014

American consumers turned sharply more pessimistic in January. The Conference Board said its Consumer Confidence Index fell 9.7 points to 84.5, the lowest reading since May 2014, when it stood at 82.2, according to Fox Business. The reading is also below the worst levels recorded during the COVID-19 pandemic.

The decline surprised forecasters. RTT News, citing the consensus estimate, reported that economists had expected the index to rise to about 90. The Conference Board also revised December’s figure up to 94.2 from an originally reported 89.1, so the January drop is measured against a stronger starting point than first thought.

“Confidence collapsed in January as consumer concerns about both the present situation and expectations for the future deepened,” Dana Peterson, the Conference Board’s chief economist, said in the release, as quoted by National Jeweler. “All five components of the Index deteriorated,” she said, according to Fox Business.

The Present Situation Index, which reflects views of business and job conditions now, fell 9.9 points to 113.7. The Expectations Index, which looks six months ahead, fell 9.5 points to 65.1. A reading below 80 on that gauge has typically signaled a recession ahead, Fox Business reported. Consumers’ six-month outlook for business conditions and the labor market slipped further into negative territory, and their expectations for household income became less positive.

Hardware Retailing, summarizing the release, said write-in responses showed that prices and inflation, oil and gas prices and grocery costs remained elevated concerns, while mentions of tariffs and trade, politics and the labor market rose.

The weakness was widespread. Confidence fell among Democrats, Republicans and Independents, with Independents showing the sharpest drop, and it declined across age and income groups, Fox Business said. Consumers under 35 remained more confident than older ones, with Gen Z the most optimistic generation, and households earning under $15,000 were the least optimistic.

There was one small bright spot: views of families’ current finances improved slightly, Fox Business reported, though expectations for future family finances fell after improving in December. Consumers also reported more caution about big purchases. Plans to buy homes, refrigerators, dishwashers, furniture and televisions continued to slip, according to National Jeweler and Hardware Retailing, and “maybe” and “no” answers about big-ticket purchases rose, Hardware Retailing said.

The report arrives as the Federal Reserve holds a policy meeting this week. Fox Business noted that the central bank was expected to leave interest rates unchanged on Wednesday. Consumer confidence is a survey of attitudes, not a measure of spending, and it can diverge from what households actually do, but economists watch it as an early read on how Americans feel about jobs and prices.