Consumer confidence in January fell by 9.7 points to 84.5, down from an upwardly revised 94.2 in December, according to the Conference Board’s Consumer Confidence Index. 

The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, dropped by 9.9 points to 113.7 in January. The Expectations Index, measuring consumers’ short-term outlook for income, business and labor market conditions, fell 9.5 points to 65.1, well below the threshold of 80 that typically signals a recession ahead.

“Confidence collapsed in January, as consumer concerns about both the present situation and expectations for the future deepened,” says Dana M Peterson, chief economist, The Conference Board. “All five components of the Index deteriorated, driving the overall Index to its lowest level since May 2014 (82.2)—surpassing its COVID-19 pandemic depths.”

Net views on current business conditions lowered and perception of employment conditions also dropped, causing the Present Situation Index to fall. All three Expectations Index components also weakened in January. Expectations for business and labor market conditions six months from now fell and the outlook for household incomes also became less positive.

Confidence among all generations trended downward in the month, but Gen Z remained the most optimistic of all generations surveyed. By income, confidence on a six-month moving average basis ticked downward for all brackets, and consumers earning less than $15K remained the least optimistic among all income groups. Consumer confidence continued to fall in January among all political affiliations, with the sharpest decline among Independents.

“Consumers’ write-in responses on factors affecting the economy continued to skew towards pessimism,” Peterson says. “References to prices and inflation, oil and gas prices, and food and grocery prices remained elevated. Mentions of tariffs and trade, politics, and the labor market also rose in January, and references to health/insurance and war edged higher.”

In January, consumers were more cautious about plans for buying big-ticket items over the next six months. Consumers who said “yes” to buying big-ticket items ahead declined in January, those who said “maybe” rose and those who responded “no” also increased. Homebuying expectations continued to retreat. Plans to purchase refrigerators, dishwashers, furniture and TVs decreased.