- U.S. consumer confidence showed its biggest drop in four years in February.
- Worries about inflation, a recession and future employment are on the rise.
- Consumers report economic concerns significantly impact their spending plans.
A closely watched measure of U.S. consumer sentiment regarding current and near-term economic conditions saw its biggest month-over-month drop in four years in February and lowest reading since last June.
On Tuesday, The Conference Board reports its Consumer Confidence Index came in at 98.3 in February, down from January’s 105.3 reading. The seven-point drop is the largest single month slide since August 2021 as U.S. consumers, who spent big over the holidays and were riding a confidence surge at the end of last year, have done an about-face in early 2025.
“Consumers became pessimistic about future business conditions and less optimistic about future income,” Stephanie Guichard, senior economist for Global Indicators, said in the new report. “Pessimism about future employment prospects worsened and reached a 10-month high.”
The Conference Board’s expectations index, a measure based on consumers’ short-term outlook for income, business and labor market conditions, dropped 9.3 points to 72.9 in February. For the first time since June 2024, the expectations index was below the threshold of 80 that usually signals a recession ahead.
The report notes February’s fall in confidence was shared across all age groups but was most significant for consumers between 35 and 55 years old. The decline was also broad-based among income groups, with the only exceptions among households earning less than $15,000 a year and those making $100,000 to $125,000 annually.
The survey found U.S. consumers’ views of their family’s current and future financial well-being declined in February and the proportion of respondents anticipating a recession over the next 12 months increased to a nine-month high.
Trump impact on consumers
Rising household prices played a role in the collective decline, according to the report, as did concerns over policy actions by President Donald Trump and his administration.
“Average 12-month inflation expectations surged from 5.2% to 6% in February,” Guichard said. “This increase likely reflected a mix of factors, including sticky inflation but also the recent jump in prices of key household staples like eggs and the expected impact of tariffs.
“References to inflation and prices in general continue to rank high in write-in responses, but the focus shifted towards other topics. There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019. Most notably, comments on the current administration and its policies dominated the responses.”
Findings in another national survey, published Tuesday by banking giant Wells Fargo, reflects a broad swath of U.S. consumers are changing their current spending habits and future plans in light of economic concerns.
Higher prices on consumer goods and services are driving a higher rate of “sticker shock” and more consumers report they are facing tough financial decisions in the face of added expenses.
Wells Fargo survey findings
A majority of consumers say they have been:
- Cutting back on spending (76%, compared to 67% last year)
- Making tough financial choices (60%, compared to 45% last year)
- Delaying some life plans (55%, compared to 45% last year)
Among those delaying life plans, a majority cite delayed travel more than anything else at 74%, followed by home renovations at 39%, relocation at 30% and buying a home, 30%.
Also:
- 17% have delayed education plans
- 14% have delayed getting married
- 13% have delayed retiring from work
Even among those with annual household incomes over $150,000, a majority, 57%, report cutting back, and nearly half, 45%, report making tough financial choices, with over a third of those in that income bracket, 37%, delaying some life plans.