AP Business Writer, Matt Ott
WASHINGTON (AP) — U.S. consumer confidence plummeted in February, marking the biggest monthly decline in more than four years, Business Research Group said Tuesday. .
The conference committee reported that the consumer confidence index has sunk to 98.3 this month from 105.3 in January. According to a Factset study, it is far below the expectations of economists who predicted 103 readings.
The 7-point decline was the biggest monthly decline since August 2021.
The Wall Street market quickly fell. The S&P 500 fell 0.6% in noon trading, but the Dow Jones industrial average remained flat. NASDAQ has dropped by 1.1%.
Respondents to the Board’s survey expressed concern over inflation as trade and tariff mentions increased significantly, the board said.
A meeting committee report on Tuesday said the measure of Americans’ short-term expectations for income, business and job markets fell 9.3 points to 72.9. The conference committee says reading under the age of 80 could indicate a potential recession in the near future.
The proportion of consumers expecting a recession the following year jumped to nine months high, the board said.
Consumers’ views on current terms fell 3.4 points to a 136.5 read this month, with views on the current labor market situation again falling.
“Out of current labor market conditions has weakened,” the group said Tuesday. “Consumers were pessimistic about future business conditions and not optimistic about future income. The pessimism about future employment outlook has deteriorated, reaching a height of 10 months.”
Consumers seemed more and more confident at the end of 2024, spending their generously during the holiday season. However, US retail sales fell sharply in January, with cold weather taking part in the blame for vehicle sales and dents at retail stores.
The Commerce Department reported last week that retail sales fell 0.9% last month. The biggest decline in the year came after two months of healthy profits.
Inflation was also sticky. So the Federal Reserve has taken a more cautious approach to interest rates, and after cutting it in the previous three, it left only the benchmark borrowing rate. Fed officials have also expressed uncertainty about the new administration’s policies.
The latest economic data and a pessimistic shift among American households are no precursors to the US economy, experts say.
In a note to clients, Carl Weinberg, chief economist in High Frequency Economics, wrote:
The Consumer Trust Index measures both an assessment of the current economic situation of Americans over the next six months and its outlook.
Consumer spending accounts for about two-thirds of US economic activity, and is closely monitored by economists for indications about how American consumers feel.
Original issue: February 25th, 2025 10:49am EST
