US Consumer Confidence Tumbles to 7-Month Low on Economic Anxiety
December reading marks the fifth straight monthly decline as worries over inflation and a cooling job market weigh on American households.
Consumer confidence in the U.S. economy slumped for a fifth consecutive month in December, hitting its lowest level in seven months as persistent inflation and a softening labor market soured Americans’ outlook. The Conference Board’s Consumer Confidence Index fell to 89.1, a notable drop from November’s downwardly revised 92.9 and well below economists' consensus forecast of 91.0.
The sharpest deterioration was seen in households' perception of current conditions. The Present Situation Index, which measures sentiment on the present state of the economy, plunged 9.5 points from 126.3 to 116.8. For the first time since September 2024, more consumers described business conditions as "bad" than "good," signaling a tangible shift in economic perception.
Meanwhile, the Expectations Index—a gauge of the short-term outlook for income, business, and labor market conditions—remained largely unchanged at a pessimistic 70.7. This marks the eleventh consecutive month the index has been below 80, a level historically associated with an impending recession. According to the Conference Board's report, primary consumer concerns centered on high prices for everyday goods, broader inflation, and the impact of tariffs.
"The fifth straight month of decline suggests consumers are growing more cautious as they head into the new year," noted Dana M. Peterson, Chief Economist at The Conference Board. The persistent gap between how consumers view the present and their worries about the future highlights a growing anxiety that could impact spending during a critical economic period.
Consumer spending is the primary engine of the U.S. economy, accounting for roughly two-thirds of all activity. A sustained decline in confidence can serve as a leading indicator for a pullback in household spending, which in turn could lead to slower economic growth. The latest data on consumer worries arrives as the Federal Reserve attempts to navigate a complex environment, balancing its fight against inflation with the goal of avoiding a deep recession.
While financial markets have been pricing in the possibility of interest rate cuts in the coming year, this report underscores the fragility of the economic landscape. The growing pessimism among consumers adds another layer of complexity for policymakers, who must weigh the lagging effects of previous monetary tightening against fresh evidence of a flagging consumer base.