US Consumer Confidence Drops In January

Consumers in the United States are less optimistic about the future according to a report released on Tuesday.

The Conference Board Consumer Confidence Index declined by 5.4 points in January to 104.1.

Consumers' assessment of current business and labor market conditions dropped sharply and the short-term outlook for income, business and labor market conditions fell 2.6 points to 83.9 but remained above the threshold of 80 that usually signals a recession ahead.

"Consumer confidence has been moving sideways in a relatively stable, narrow range
since 2022," said Dana M. Peterson, Chief Economist at The Conference Board. "January was no exception. The Index weakened for a second straight month, but still remained in that range, even if in the lower part."

The return of pessimism about future employment prospects that was seen in December was confirmed in January, according to Peterson.

Younger consumers and higher-income groups were more pessimistic.

January's fall in confidence was led by consumers under 55 years old. Older consumers had a small increase in confidence, according to the Conference Board.

Households earning more than $125,000 also saw the sharpest decline in confidence.

Consumers at the bottom of the income range reported the strongest gains.

The survey also found expectations of continued elevated inflation.

Average 12-month inflation expectations increased from 5.1% to 5.3% in January.

The non-partisan Conference Board delivers its Consumer Confidence Index on the last Tuesday of every month.