• Consumer confidence declined to 89.1 in December, below the consensus forecast of 91.0 and down from a revised November reading of 92.9.
  • The Expectations Index has remained below the 80 recession-warning threshold for ten consecutive months, signaling persistent economic anxiety.
  • Buying conditions for durable goods worsened for the fifth straight month, indicating consumers are deferring major purchases as inflation expectations ease slightly.

A Troubling Trend in Consumer Sentiment

The Conference Board Consumer Confidence Index fell to 89.1 in December, missing consensus expectations of 91.0 and declining from a revised November reading of 92.9. This marks a continued weakening in consumer sentiment, with the index now at depressed levels as Americans express concern about economic conditions and their personal finances. According to people familiar with the matter, the decline extends a troubling trend this year, with the index previously dropping sharply in November to 88.7 (later revised to 92.9), its lowest point since April 2025.

Labor market concerns dominate consumer worries, with the labor market differential—comparing those who say jobs are "plentiful" versus "hard to get"—declining considerably throughout the year. In November, only 15.9% of consumers expected business conditions to improve, down from 18.9% in October, while 27.7% expected conditions to worsen, up from 22.2%. Financial pessimism extends to personal finances, as consumers' assessments of both their current and expected future situations deteriorated, according to recent surveys.

Inflation expectations have shown signs of moderation but remain elevated. Year-ahead inflation expectations decreased to 4.2% in December—the lowest reading in 11 months—though this is still above the 3.3% seen in January 2025. Long-run inflation expectations eased to 3.2%. Meanwhile, buying conditions for durable goods fell for the fifth consecutive month in December, suggesting consumers are holding back on major purchases. Since consumer spending accounts for more than two-thirds of the U.S. economy, this weakened confidence poses risks to overall growth, analysts note.

Demographic shifts add complexity to the picture. Lower-income consumers showed some gains in December sentiment, while higher-income consumers remained relatively unchanged, according to data from the University of Michigan's separate measure, which put sentiment at 52.9 in December, up slightly from 51.0 in November but substantially lower than 74.0 a year earlier. Consumers age 55 and older have been the most downbeat throughout 2025, though those under 35 posted continued improvements on a six-month moving average basis. Confidence fell among voters of all political affiliations in November, with the sharpest retreat among independent voters, potentially influenced by fiscal uncertainties like the government shutdown during survey periods.

Looking ahead, the persistent weakness below recession-warning thresholds and deterioration in expectations suggest consumers remain deeply concerned about economic prospects heading into 2026. Efforts to boost sentiment have hit a snag as inflation lingers and job market dynamics shift. Without a sustained improvement, the economy could face further headwinds, with some consumers already believing a recession is underway, according to recent polling data. Attempts to reach out to The Conference Board for additional comment were unsuccessful at press time.