Consumer Confidence Hits Lowest Level Since April Amid Inflation, Weak Labor Market Concerns

Consumer confidence fell in December to the lowest level since April’s tariff implementation, reflecting concerns about increasing inflation and a weak labor market, according to an analysis by the National Association of Home Builders’ Eye on Housing. The labor market differential, which measured the gap between consumers viewing jobs as plentiful and hard-to-get, continued to narrow and is now at the lowest level since February 2021.

The Consumer Confidence Index, reported by the Conference Board, is a survey measuring how optimistic or pessimistic consumers feel about their financial situation. The index fell from 92.9 to 89.1 in December, the lowest level since April. The Present Situation Index decreased 9.5 points from 126.3 to 116.8, the largest monthly decline since September 2024. The Expectation Situation Index remained unchanged at 70.7, the 11th consecutive month that this index has been below 80, a sign that often signals recession within a year.

Consumers’ assessment of current business conditions deteriorated in December, with the number of respondents rating business conditions as “bad” up 3.3 percentage points to 19.1%, those reporting jobs as “plentiful” down 1.5 percentage points to 26.7% and those who saw jobs as “hard to get” up 0.7 percentage points to 20.8%, the highest since February 2021.

Consumers were also more pessimistic about the short-term outlook. Respondents expecting business conditions to improve fell from 18.1% to 18.0% and those expecting business conditions to deteriorate fell from 25.1% to 21.8%. Respondents expecting “more jobs” remained unchanged at 16.5% and those anticipating “fewer jobs” increased by 0.6 percentage points to 27.4%.

The number of respondents planning to buy a home within six months fell to 5.7% in December, the lowest level since August. Out of those, 0.5% plan to buy a newly constructed home, 2.4% plan to buy an existing home and 2.8% were planning to buy a home but were undecided between new and existing homes.