The Conference Board Consumer Confidence Index fell by 9.7 points in January to 84.5, from an upwardly revised 94.2 in December, and remains well below the 100 break-even point between positive and negative sentiment.
The 5.1-point upward revision to the December reading led to a slight increase in consumer confidence that month, reversing the initially reported decline. Still, January’s preliminary results showed that confidence resumed its slide after the one-month gain.
The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, tumbled 9.9 points to 113.7 in January. The Expectations Index, based on consumers’ outlook for income, business and labor market conditions six months out, dropped 9.5 points to 65.1.
The Present Situation Index fell, as net views on current business conditions weakened to just barely positive, at up 0.1%. Employment condition perceptions also edged lower, with the labor market differential, the share of consumers saying jobs are plentiful minus the share saying jobs are hard to get, continuing to flag. The outlook for household incomes among consumers polled became less positive.
Present Situation trends were:
- 17.9% of consumers said business conditions were good, down from 19.8% in December.
- 17.8% said business conditions were bad, up from 17.6%.
- 23.9% of consumers said jobs were plentiful, down from 27.5%
- 20.8% of consumers said jobs were hard to get, up from 19.1%.
Expectation Index trends were:
- 15.6% of consumers expected business conditions to improve, down from 18.7% in December.
- 22.9% expected business conditions to worsen, up from 21.3%.
- 13.9% of consumers expected more jobs to become available, down from 17.4%
- 28.5% anticipated fewer jobs becoming available, up from 26.%.
Compared with December, consumers indicated greater caution about plans to purchase big-ticket items over the next six months, as the share who said they would do so declined in January, the Conference Board noted. At the same time, the proportion who said maybe increased, and the proportion who responded no also rose. Homebuying expectations continued to slip. Plans to purchase refrigerators, dishwashers, furniture and televisions also trended lower. Used cars, furniture, TVs and smartphones remained the most popular segments within their categories in regard to future purchases.
In terms of demographic groups, the Conference Board noted that confidence on a six-month moving average basis slipped for all age groups in January, although consumers under 35 remained more confident than those older. Confidence across all generations declined in January, but Gen Z remained the most optimistic. By income, confidence on a six-month moving average basis ticked downward across the board. Consumers earning less than $15,000 remained the least optimistic among all income groups. Consumer confidence faded in January among all political affiliations, with the sharpest decline among independents.
“Confidence collapsed in January, as consumer concerns about both the present situation and expectations for the future deepened,” said Dana Peterson, Conference Board chief economist, in announcing the figures. “All five components of the Index deteriorated, driving the overall Index to its lowest level since May 2014, 82.2, surpassing its COVID-19 pandemic depths. Consumers’ write-in responses on factors affecting the economy continued to skew towards pessimism. References to prices and inflation, oil and gas prices, and food and grocery prices remained elevated. Mentions of tariffs and trade, politics and the labor market also rose in January, and references to health/insurance and war edged higher.”
