U.S. Confidence Index Climbs, But Remains Below 2024 Peak
U.S. consumer confidence showed modest improvement in February, reversing part of January’s decline as Americans grew slightly less pessimistic about the months ahead.
Key Takeaways
- Consumer confidence rose to 91.2 in February, recovering from January but still far below its 2024 peak.
- Expectations improved, while views of current business conditions weakened.
- Inflation and high interest rates remain major concerns.
- Recession fears eased slightly.
- Buying plans for big-ticket items increased, led by used cars and electronics.
The Conference Board said its Consumer Confidence Index increased by 2.2 points to 91.2 in February (1985=100), up from a revised 89.0 in January. While the rebound signals some stabilization, confidence remains well below the four-year high of 112.8 reached in November 2024.
Expectations Rebound, Present Conditions Weaken
The improvement was driven primarily by a pickup in the Expectations Index, which climbed 4.8 points to 72.0. The gauge, which tracks consumers’ outlook for income, business activity, and labor market conditions over the next six months, remains below the key 80 threshold often associated with recession risks but showed clear signs of easing pessimism.
By contrast, the Present Situation Index slipped 1.8 points to 120.0, reflecting softer views of current business conditions. Net assessments of business activity deteriorated, even as labor market perceptions improved modestly.
The labor market differential – the share of consumers saying jobs are “plentiful” minus those saying they are “hard to get” – rose to +7.4%, up 0.6 percentage points from January. Still, both positive and negative job assessments increased, suggesting mixed signals in household sentiment.
Inflation and Rates Still Weighing on Minds
Despite the headline improvement, consumers’ write-in responses continued to highlight persistent concerns about prices and the overall cost of living. Mentions of inflation remained dominant, while references to trade and politics increased in February.
Twelve-month inflation expectations were little changed and stayed elevated. Consumers also widely expect interest rates to remain high over the coming year. While most still anticipate higher stock prices 12 months from now, that share declined slightly compared to January.
On family finances, current conditions softened after January’s unexpected surge. Expectations for future household finances also remained subdued.
Recession Fears Ease Slightly
Views on recession risks showed some improvement. The share of respondents who believe a U.S. recession is “very likely” over the next year declined, while those saying a downturn is “not likely” increased. However, more consumers now see a recession as “somewhat likely,” underscoring lingering caution.
These recession measures are not included in the headline confidence index but provide insight into broader economic sentiment.
Buying Plans Show Mixed Trends
Consumers signaled stronger intentions to purchase big-ticket goods over the next six months. The share planning or considering purchases increased, while outright refusals declined.
Used cars, furniture, televisions, and smartphones remained the most popular planned purchases. Auto buying plans continued to trend upward on a six-month basis, with consumers still favoring used vehicles. New car buying intentions were unchanged.
Homebuying expectations were little changed in February but have been gradually retreating on a six-month average, though they remain above year-ago levels.
Among durable goods, plans to buy furniture, TVs, dishwashers, and ranges ticked higher, while intentions to purchase refrigerators and washing machines edged lower. Smartphone demand continued to strengthen.
Services Spending Shifts Toward Essentials
Planned spending on services softened slightly but remained relatively resilient. Consumers appear focused on lower-cost leisure and essential services rather than highly discretionary spending.
Spending intentions increased for utilities, pet care, and gambling or lottery services. Restaurants, bars, and takeout remained the top category and edged marginally higher. Meanwhile, expectations for spending on streaming services, personal care, and travel eased. Overall vacation plans dipped modestly for both domestic and international trips.
Younger Consumers More Optimistic
On a six-month moving average basis, confidence improved among consumers under 35, who remain the most optimistic demographic group. Generation Z sentiment also strengthened. By contrast, confidence declined among older age groups and most income brackets.
Confidence rebounded among Republican and Independent respondents after a January dip, while Democratic respondents grew less optimistic.
Taken together, February’s data point to a cautious consumer: less fearful about the future than in January, but still constrained by inflation concerns, elevated borrowing costs, and uneven assessments of current business conditions.
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