Confidence Measures Fall as Inflation and Labor Concerns Persist
Consumer confidence plummeted 9.7 points in January to 84.5, its lowest level since 2014. Among its components, the Present Situation Index and Expectations Index both declined as consumers’ concerns regarding the present situation and expectations for the future worsened.
The Present Situation Index, reflecting current business and labor market conditions, fell 9.9 points to 113.7. Meanwhile, the Expectations Index, which reflects consumers’ short-term outlook for income, business and labor market conditions, decreased 9.5 points to 65.1, remaining below the recession signal threshold of 80 since February 2025.
Views of the current labor market situation weakened, with 23.9% of consumers saying jobs were “plentiful,” down from December (27.5%), while 20.8% said jobs were “hard to get,” up from December (19.1%). Looking to the future, 28.5% expect fewer available jobs in the next six months, up from 26.0% the prior month, while 13.9% anticipate more jobs to be available, down from 17.4% the previous month.
Mentions of high prices and inflation, tariffs and trade, politics and the labor market continued to top the list of topics influencing consumers’ views of the economy. At the same time, mentions of health care and insurance and war edged higher in January. Consumers’ 12-month inflation expectations increased, and the proportion of consumers expecting interest rates to rise dipped in January. At the same time, the share of consumers who believe a recession is “very likely” over the next year ticked up, and the small share thinking the economy is already in a recession rose.
Buying plans for cars overall were flat in January, as purchasing plans for homes fell. Consumers’ plans for buying big-ticket items declined in January, with purchasing plans for household appliances and electronics decreasing in all categories except smartphones. Consumers’ intentions to purchase more services also dropped; however, restaurants, bars and take-out remain the top planned service spending category and continued to rise. Overall, consumers’ views of their current and future financial situation weakened in January.