The Conference Board released a report on Tuesday unexpectedly showing a significant deterioration in U.S. consumer confidence in the in the month of January.
The Conference Board said its consumer confidence index plummeted to 84.5 in January from an upwardly revised 94.2 in December.
Economists had expected the consumer confidence index to inch up to 90.0 from the 89.1 originally reported for the previous month.
“Confidence collapsed in January, as consumer concerns about both the present situation and expectations for the future deepened,” said Dana M Peterson, Chief Economist at The Conference Board.
She added, “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.”
The report said the present situation index, which is based on consumers’ assessment of current business and labor market conditions, plunged to 113.7 in January from 123.6 in December.
The expectations index, which is based on consumers’ short-term outlook for income, business, and labor market conditions, also tumbled to 65.1 in January from 74.6 in December, the Conference Board said.
The Conference Board noted the expectations slumped further below the threshold of 80 that usually signals a recession ahead.
“Consumers’ write-in responses on factors affecting the economy continued to skew towards pessimism,” Peterson said. “References to prices and inflation, oil and gas prices, and food and grocery prices remained elevated.”
She added, “Mentions of tariffs and trade, politics, and the labor market also rose in January, and references to health/insurance and war edged higher.”
Meanwhile, revised data released by the University of Michigan last Friday showed consumer sentiment in the U.S. improved much more than previously estimated in the month of January.
The University of Michigan said its consumer sentiment index for January was upwardly revised to 56.4 from a preliminary reading of 54.0. Economists had expected the index to be unrevised.
With the unexpected upward revision, the consumer sentiment index is well above the December reading of 52.9.
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