The Conference Board’s expectations index fell to 81.1 in December, its lowest level in five months. The data is approaching 80, a benchmark that usually signals a recession. Some of those surveyed are concerned that President Trump’s proposed tariffs will raise the cost of living.
U.S. consumers are losing confidence in the economy weeks before President Donald Trump’s re-election, new data shows.
The Conference Board’s index of U.S. consumer sentiment fell 8.1 points in December to 104.7, falling within consensus expectations for an increase, the nonprofit think tank said Monday.
The index aims to capture consumers’ assessment of the business and labor markets and their views on where things are likely to go in the coming months.
The group said the latter weighed on this month’s decline, with its index of consumer expectations, which gauges the short-term outlook for income, business and labor markets, dropping 12.6 points to 81.1, the lowest level in five months. Ta.
This is close to the 80 threshold that typically signals a recession, the Conference Board said in a press release.
The data marks a sharp turnaround in consumer optimism after two months.
“Weak assessments of consumer current conditions and expectations contributed to the decline, but expectations were the steepest decline,” Dana M. Peterson, chief economist at the Conference Board, said in a press release. Consumers in December were significantly less optimistic about the future of the economy and their incomes.
The survey’s write-in responses suggest that concerns about politics and tariffs, including the November election results, are fueling consumer anxiety, the press release said.
In a special question in this month’s survey, 46% of consumers said they expected the cost of living to rise due to tariffs, meaning more consumers are looking to make large purchases to avoid future price increases. This is consistent with a University of Michigan poll. Some of this is due to upward pressure on inflation from tariffs.
Tariffs, one of President Trump’s main selling points, could boost U.S. employment, but consumer optimism doesn’t seem to be growing. According to the Conference Board, only 21% of respondents said they expected tariffs to create more U.S. jobs.
“After a period of cautious optimism in October and November, pessimism has returned about future job prospects,” Peterson said.
President Trump has threatened to impose 25% tariffs on imports from Canada, China and Mexico, and recently threatened to impose 100% tariffs on emerging market countries in the BRICS group.
Shares of Walmart, often seen as a bellwether for consumer health, plunged after the study was released, and were down 3% as of midday Monday.
As a low-cost retailer popular with low-income consumers, Wal-Mart typically takes a defensive stance as investors flock to the company when economic conditions worsen.
But despite relatively high sentiment, it has been a big hit this year, rising 70% year-to-date and outperforming the S&P Global Luxury Index.
Investment strategist Jim Paulsen said this seemingly contradictory stock market could be a sign of a bubble recession.
“With so many signals of optimism in the stock market right now, investors are more concerned about the typical “defensive” retailers (which could be expected if a recession is imminent) than the most aggressive luxury goods stocks. “It’s strange that I like the idea that it works relatively well,” Paulsen previously wrote in a Substack newsletter. this month.
