Consumer confidence plunges to lowest level in more than a decade

• The expectations index fell to 65.1, well below the 80 threshold that usually indicates an upcoming recession, with labor market and business condition outlooks slipping further into negative territory
• Confidence declined across all demographic groups, with Independents experiencing the sharpest drop, though Gen Z remained the most optimistic generation and those under 35 were more confident than older peers
• The present situation index fell 9.9 points to 113.7 as perceptions of both business conditions and employment deteriorated

Summary

Key Development:

U.S. consumer confidence plunged to 84.5 in January, down 9.7 points from December's revised 94.2, marking the lowest level since May 2014 (82.2). This represents the sharpest decline in over a decade, falling below pandemic-era lows.

Critical Details:

• The Present Situation Index dropped 9.9 points to 113.7, reflecting deteriorating views on current business conditions and employment
• The Expectations Index fell 9.5 points to 65.1—significantly below the 80 threshold that typically signals recession risk
• All five components of the index deteriorated simultaneously
• Labor market concerns drove the decline, with expectations for business and employment conditions six months ahead slipping into negative territory

Demographic Breakdown:

• Confidence declined across all age and income groups
• Political independents experienced the sharpest drop
• Gen Z and consumers under 35 remained most optimistic
• Those earning under $15,000 showed the least optimism

Economic Context:

The collapse in confidence occurred as Americans express heightened concerns about employment prospects and the overall labor market. While views on current family finances improved slightly, expectations for future financial situations deteriorated. Recession probability perceptions showed mixed signals, with some respondents seeing increased likelihood of economic contraction within 12 months.

Market Implications:

This data arrives during the Federal Reserve's policy meeting, with rates expected to hold steady Wednesday. The severe confidence drop suggests potential weakness in consumer spending—a critical driver of U.S. economic growth—which could pressure retail sectors and influence future Fed policy decisions.