The US consumer confidence index plunged seven points to 98.3 in February – its steepest monthly drop since August 2021. The Conference Board’s latest report reveals mounting anxiety over inflation, trade wars, and deteriorating labor markets, with recession signals flashing red.
A expectations reading below 80 often precedes recessions. We’re now at 72.9,warned The Conference Board.
Key drivers behind the collapse:
- Trade war fears surged 28% among survey respondents
- Short-term economic outlook scores crashed 9.3 points
- Pessimism about job prospects reached a ten-month high
Wall Street reacted immediately:
- Dow Jones plunged 1.7%
- S&P 500 fell 0.7%
- Nasdaq dropped 1.4%
This economic whiplash follows contradictory trends. While holiday 2024 spending hit record levels, January retail sales cratered 0.9% – the worst decline in 12 months. Auto dealers blamed winter storms, but analysts see deeper issues.
When confidence and spending diverge this sharply, it signals fundamental instability,said a Federal Reserve researcher (requesting anonymity).
The labor market – traditionally a bright spot – now shows cracks. Only 38% of consumers call jobs plentifulversus 42% in January. With inflation expectations rising and tariff threats looming, economists warn of Q2 contraction risks.
Historical patterns add context: The last sub-80 expectations reading (July 2022) preceded three straight GDP declines. However, today’s unique mix of geopolitical tensions and election-year policies complicates forecasts.
