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The Conference Board's Consumer Confidence Index fell 7.0 points in February to 98.3, the nonprofit business research group said on Tuesday, Feb, 25. That marks the metric's steepest monthly decline since August 2021.
The Expectations Index also dropped 9.3 points to 72.9. That number gauges consumers' outlook on jobs, income, and business conditions.
For the first time since June 2024, the Expectations Index fell below the 80-point threshold that "usually signals a recession ahead."
"Of the five components of the Index, only consumers' assessment of present business conditions improved, albeit slightly," said Stephanie Guichard, a senior economist at The Conference Board. "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."
The decline is the latest troubling economic indicator at the beginning of 2025. January home sales dropped as mortgage rates and prices remained high, worsening affordability issues.
Inflation, which unexpectedly surged at the start of the year, has kept pressure on household budgets. Egg prices spiked 15 percent in January and housing costs rose 4.4 percent since January 2024.
The economic anxiety echoes broader frustrations with the state of the economy after President Donald Trump's first month in office. Trump's tariff policies and trade war threats with longtime allies have fueled uncertainty over rising costs for construction materials, labor costs, and other goods.
Inflation expectations jumped to six percent in February, driven by price increases in key household staples and the anticipated impact of tariffs.
"References to inflation and prices in general continue to rank high in write-in responses, but the focus shifted towards other topics," Guichard 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."
Consumer confidence fell across all age groups but hit those between 35 and 55 the hardest. The decline also spanned income levels, with the only exceptions among households earning less than $15,000 a year and those making between $100,000 and $125,000.
Economic uncertainty has shaken financial markets as well, with the share of consumers expecting stock prices to rise over the next year falling to 46.8 percent, the lowest since April 2024. Meanwhile, 51.7 percent of consumers anticipated higher interest rates, up from 27.1 percent in January.
Concerns over a possible recession reached a nine-month high. While recent declines in mortgage rates have helped stabilize homebuying plans, demand for cars and big-ticket items like TVs and electronics has dropped.
Retailers continue to struggle against rising costs and online competition, with crafts chain Joann as the latest casualty after announcing it'll close 800 stores nationwide. In 2024, more than 7,000 US stores shut down, with analysts predicting an even steeper decline in 2025.
Consumers also grew more pessimistic about the job market, with more people expecting employment prospects to worsen over the next six months. Just 18.4 percent of respondents expected job availability to improve, while 25.9 percent anticipated fewer openings.
The survey also said 13.7 percent of Americans expect their incomes to decrease, up from 12.3 percent in January.
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