The Conference Board Consumer Confidence Index declined by 5.4 points in January to104.1
“Consumer confidence has been moving sideways in a relatively stable, narrow range since 2022,” said Dana M. Peterson, Chief Economist at The Conference Board, in a statement. “January was no exception. The Index weakened for a second straight month, but still remained in that range, even if in the lower part.”
“All five components of the Index deteriorated but consumers’ assessments of the present situation experienced the largest decline,” Peterson added. “Notably, views of current labor market conditions fell for the first time since September, while assessments of business conditions weakened for the second month in a row. Meanwhile, consumers were also less optimistic about future business conditions and, to a lesser extent, income. The return of pessimism about future employment prospects seen in December was confirmed in January.”
Average 12-month inflation expectations increased from 5.1% to 5.3% in January, likely reflecting stickier inflation in recent months. Additionally, references to inflation and prices continue to dominate write-in responses. More than half (51.4%) of consumers now expect higher interest rates over the next 12 months. The share expecting lower rates dropped from 28.5% last month to 23.9% in January. This is consistent with recent signaling by the Fed that the pace of interest rate cuts may slow in 2025, as well as ongoing increases in mortgage rates.
The proportion of consumers anticipating a recession over the next 12 months was stable near the series low. Consumers also remained bullish about the stock market, even if a bit less so than at the end of 2024. Over half of consumers (52.9%) expected stock prices to increase over the year ahead, compared to just 23.7% who expected stock prices to decline.”
By age group, January’s fall in confidence was led by consumers under 55 years old. Consumers aged 55+ saw a small uptick in confidence. By income group, the sharpest decline in confidence was seen in households earning over $125K, while consumers at the bottom of the income range reported the strongest gains. The confidence gap between the top income groups and those making between $75K and $100K narrowed.
On a six-month moving average basis, purchasing plans for homes and cars were flat in January. More consumers planned to buy big-ticket items over the next six months than not, but that share was down slightly. Consumer buying plans were flat for most appliances and still down for electronics on a six-month moving average basis. Separately, consumers continued to express intentions to purchase additional services in the months ahead, especially dining out and streaming. Vacation plans continued to trend downward at the start of 2025.
Present Situation
Consumers’ assessments of current business conditions deteriorated in January.
• 18.4% of consumers said business conditions were “good,” down from 21.0% in December.
• 15.4% said business conditions were “bad,” unchanged from December.
Consumers’ appraisals of the labor market plunged in January.
• 33.0% of consumers said jobs were “plentiful,” down from 37.1% in December.
• 16.8% of consumers said jobs were “hard to get,” up from 14.9%.
Expectations Six Months Hence
Consumers were less optimistic about the outlook for business conditions in January.
• 20.9% of consumers expected business conditions to improve, down from 22.7% in December.
• 18.7% expected business conditions to worsen, up from 17.3%.
Consumers’ assessments of the labor market outlook remained pessimistic.
• 19.4% of consumers expected more jobs to be available, down slightly from 19.8% in December.
• 20.3% anticipated fewer jobs, unchanged from December.
Consumers’ assessments of their income prospects were less optimistic in January.
• 18.3% of consumers expected their incomes to increase, down from 19.0% in December.
• 11.9% expected their incomes to decrease, down from 12.1%.
