Consumer confidence continued to slide down in January, according to data from The Conference Board, however, experts feel the downtrend is not outside of the range it’s been in the past few years.
“Consumer confidence has been moving sideways in a relatively stable, narrow range since 2022. January was no exception,” said Dana M. Peterson, chief economist at The Conference Board
This is the second consecutive month of decreases in confidence, but most expectations remain above the recession thresholds.
The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—saw a large drop in January, falling 9.7 points to 134.3.
Consumers’ outlook of business conditions worsened slightly in January: 18.4% of consumers said business conditions were “good,” (down from 21% in December) and 15.4% said conditions were “bad,” (unchanged from December)
In terms of the labor market, 33% of consumers said jobs were “plentiful,” (down from 37.1% in December) and 16.8% of consumers said jobs were “hard to get,” (up from 14.9%). This decrease in positivity about the labor market is the first fall seen since September.
The Expectations Index—based on consumers’ short-term outlook for income, business and labor market conditions—decreased 2.6 points to 83.9. This still remains above the threshold of 80 that would signal a recession.
Looking ahead at the next six months, consumers expressed that purchasing plans for homes were flat in January. Further expectations for the next six months all saw a downturn in January.
In terms of business conditions, 20.9% of consumers expected conditions to improve (down from 22.7% in December) and 18.7% expected conditions to worsen (up from 17.3%). In terms of jobs, 19.4% of consumers expected more jobs to be available (down from 19.8% in December), and 20.3% anticipated fewer jobs (unchanged from December).
As of the next year, 12-month inflation expectations increased from 5.1% to 5.3% in January, likely reflecting stickier inflation in recent months.
