Washington, D.C – A business study group said Tuesday that U.S. consumer confidence dropped the most in more than four years in February. This comes at a time when inflation seems to have stopped rising and more and more Americans think that a trade war under President Trump is inevitable.
The Conference Board said that the measure of consumer confidence fell from 105.3 in January to 98.3 this month. A poll by FactSet found that economists thought the reading would be 103, which is a lot higher than what it actually was.
The seven-point drop was the biggest from one month to the next since August 2021.
Wall Street markets went down right away. During the middle of the day, the S&P 500 fell 0.6% and the Dow Jones Industrial Average stayed the same. The Nasdaq went down 1.1%.
The board said that people who answered the poll were worried about inflation and that there were a lot more mentions of trade and tariffs.
In its study released Tuesday, the Conference Board said that Americans’ short-term hopes for their income, businesses, and the job market dropped 9.3 points to 72.9. According to the Conference Board, a number below 80 can mean that a recession might be coming soon.
The board said that the number of customers who think there will be a recession in the next year rose to its highest level in nine months.
This month, consumers’ views on current events dropped 3.4 points to 136.5, and they also saw a drop in their views on the current state of the job market.
The group said Tuesday that people’s opinions about the current state of the job market “weakened.” “People became less optimistic about their future income and less positive about the state of businesses in the future.” People became even less optimistic about their job chances in the future, reaching a ten-month high.
As the year came to a close in 2024, consumers seemed more secure and spent a lot during the holidays. But in January, U.S. retail sales dropped sharply. Part of the reason for this was the cold weather, which slowed down sales of both cars and goods in shops.
The Commerce Department said last week that retail sales dropped 0.9% from December to January. After two months of steady growth, the drop was the biggest in a year.
Also, inflation has not changed. It’s become so bad that the Federal Reserve is being more careful with interest rates. At its most recent meeting, it didn’t change the benchmark lending rate, but it had done so three times before. Fed officials are also not sure what the new government will do with its policies.
Experts say that the most recent economic figures and the fact that more American households are feeling pessimistic are not good signs for the U.S. economy.
Carl Weinberg, chief economist at High Frequency Economics, wrote in a note to clients, “We are expecting the economy to slow down because all the signs point to falling consumer and business confidence and sentiment.”
The consumer confidence index shows how Americans feel about the economy right now and how they think it will be in six months.
Spending by consumers makes up about two-thirds of the U.S. economy, and experts pay close attention to it to see how people are feeling.
