The Consumer Confidence Index is a great indicator of how many Americans feel about the economy. In the first month of the Trump administration’s second term, many people have had concerns over the economy’s future. The looming threat of tariffs and the uncertainty of their consequences have paralyzed consumers. February’s report from The Conference Board saw a sharp decline in consumer confidence, the largest since August 2021.
Consumer Confidence Index Plummets
The index fell a whole seven points, going from 105.3 in January to 98.3 in February. This was much lower than many experts had predicted, as a survey by FactSet said the index would settle at 103. The markets immediately responded by dropping significantly. The index is a measure of not just the current assessment of the economy but the outlook for the next six months. Consumer spending makes up the majority of the US economy so analysts closely watch it.
Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board, had this to say about the Consumer Confidence Index report for February.
โIn February, consumer confidence registered the largest monthly decline since August 2021. 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 consumersโ 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.โ
Age Group With The Most Concerns
The fall in confidence in the economy was spread across all ages, but one age group stood out in the report. Consumers between the ages of 35 and 55 are the ones whose confidence has been shaken the most. This isn’t surprising as these are the people who inflation has generally hit the most. Grocery prices have been a hot-button issue for the past few years, and prices have continued to stay inflated for a variety of factors.
Guichard specifically cited the steep drop in the Consumer Confidence Index as a reason for the prices of certain staple items, like eggs. Additionally, she mentioned the uncertainty around potential tariffs as another topic, shaking consumer confidence. President Trump has given many of the United States’s biggest trade partners a deadline, and that day is fast approaching. While experts can make predictions on what will happen, no one knows for sure making consumers uneasy.
Other Key Points From The Report
The report wasn’t all bad. Consumers expressed some optimism in the report. 19.6% of consumers said current business conditions were “good,” which was up from 18.5% last month. 33.4% of consumers said jobs were plentiful, only 0.5% down from last month. 18.2% anticipated their income to increase in the next six months, up 0.1% from January. Most of the pessimism among consumers came in the six-month outlook.
26.7% of consumers said they expect business conditions to worsen. This is up over 7% from last month. There was also an increase in concerns over the number of jobs that will be available down the road. 25.9% of consumers anticipate fewer jobs, up from 21.0% in January. One of the biggest jumps was in the concern of a recession happening soon. Two-thirds of American consumers believe an economic recession is “somewhat” or “very likely.”
Final Thoughts
The Consumer Confidence Index paints an interesting picture for the month of February. Americans are concerned about their money and are, therefore, spending less of it. The biggest issue seems to be the fear of the unknown. Tariffs have not been on the table for years, giving us limited data to work on what will happen in the modern era. The deadline President Trump gave for the tariffs is in early March. Next month’s report will likely point toward the immediate impact those decisions have on consumers.
