Catenaa, Tuesday, February 25, 2025– US consumer confidence tumbled to 98.3 in February, the largest monthly decline since August 2021, the Conference Board said on Tuesday, signalling the risk of recession.
The report stated US consumer confidence index sank this month to 98.3 from 105.3 in January, falling far below the expectations of 103 by economists.
Consumer spending accounts for about two-thirds of U.S. economic activity and is closely watched by economists for signs of how the American consumer is feeling.
The seven-point drop was the biggest month-to-month decline since August of 2021.
Markets on Wall Street immediately sank. The S&P 500 fell 0.5%, while the Dow Jones Industrial Average slid 1.7%.
The deterioration was broad-based, with the Present Situation Index dropping -3.4 points to 136.5, while the Expectations Index sank -9.3 points to 72.9.
This is the first time since June 2024 that the Expectations Index has fallen below the critical threshold of 80, which historically signals elevated recession risk.
The consumer confidence index measures both Americans’ assessment of current economic conditions and their outlook for the next six months.
Stephanie Guichard, Senior Economist at the Conference Board, highlighted that consumer sentiment has now declined for three consecutive months, pushing the index to the bottom of its two-year range.
She pointed out that pessimism about future business conditions, income, and employment prospects has worsened, with job market expectations hitting a ten-month low.
A key concern is the sharp rise in inflation expectations, which surged from 5.2% to 6% in February.
Guichard attributed this to a combination of sticky inflation and a spike in household staple prices, as well as the anticipated impact of new trade tariffs. Notably, mentions of trade and tariffs in consumer surveys have surged to levels not seen since 2019.
