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Consumer confidence declined seven points in February to 98.3. The Consumer Confidence Index, which fell for the third consecutive month, exhibited the largest monthly decrease since August 2021. The index is now at the bottom of the range that has prevailed since 2022.

The Present Situation Index, reflecting current business and labor market conditions, fell 3.4 points to 136.5. Meanwhile, the Expectations Index, which reflects consumers’ short-term outlook for income, business and labor market conditions, dropped 9.3 points to 72.9 and fell below the recession signal threshold of 80 for the first time since June 2024.

Of all components, only consumers’ assessments of current business conditions improved, and only slightly, with 19.6% of consumers saying business conditions were “good,” up from 18.5% in January. On the other hand, consumers’ outlook for future business conditions turned negative. Views of the current labor market situation softened, with 33.4% of consumers saying jobs were “plentiful,” while 16.3% said jobs were “hard to get.” Consumers’ pessimism about future labor market conditions worsened to a 10-month high, with a higher percentage anticipating fewer rather than more jobs to be available in the next six months. February’s drop in confidence was strongest for consumers between the ages of 35 and 55.

As inflation pressures have heated up in recent months, inflation expectations likewise ticked up from 5.2% to 6.0% in February. Meanwhile, expectations for higher interest rates rose, with more than half of consumers (51.7%) expecting higher rates in the next 12 months. Consumers’ views of their current financial situation softened from January, following a series high, while expectations for a recession in the next 12 months increased to a nine-month high. Nevertheless, buying plans for homes improved, perhaps linked to a decrease in mortgage rates, but plans to buy new cars and other big-ticket items declined. Mentions of trade and tariffs in written responses sharply increased to levels not seen since 2019, likely influencing inflation expectations.