U.S. consumer confidence plummeted in February, the biggest monthly decline in nearly four years, Business Research Group said Tuesday, with inflation appearing to be stuck and the trade war under Donald Trump is considered inevitable.
The conference committee reported that the consumer confidence index has sunk to 98.3 this month from 105.3 in January. According to a Factset study, it is far below the expectations of economists who predicted 103 readings.
The 7-point decline was the biggest monthly decline since August 2021.
The Wall Street market quickly drooped. The S&P 500 fell 0.7%, while the Dow Jones industrial average slipped 1.7%. NASDAQ fell by 1.4%.
Respondents to the Board’s survey expressed concern over inflation as trade and tariff mentions increased significantly, the board said.
A conference committee report on Tuesday said the measure of Americans’ short-term expectations for income, business and job markets fell 9.3 points to 72.9. The conference committee says reading under the age of 80 could indicate a potential recession in the near future.
The proportion of consumers expecting a recession the following year jumped to nine months high, the board said.
Consumers’ views on current terms fell 3.4 points to a 136.5 read this month, with views on the current labor market situation again falling.
“Out of current labor market conditions has weakened,” the group said Tuesday. “Consumers were pessimistic about future business conditions and not optimistic about future income. The pessimism about future employment outlook has deteriorated, reaching a height of 10 months.”
Consumers seemed more and more confident at the end of 2024, spending their generously during the holiday season. However, US retail sales fell sharply in January, and cold weather took emergency responsibility for vehicle sales at retailers.
The Commerce Department reported last week that retail sales fell 0.9% last month. The biggest decline in the year came after two months of healthy profits.
The Consumer Trust Index measures both an assessment of the current economic situation of Americans over the next six months and its outlook.
Consumer spending accounts for about two-thirds of US economic activity, and is closely monitored by economists for indications about how American consumers feel.
