U.S. consumer confidence plummeted to a 12-year low in January as Americans grew increasingly concerned about their financial futures. The Conference Board reported Tuesday that its consumer confidence index fell 9.7 points to 84.5, the lowest reading since May 2014 and below the depressed levels recorded during the COVID-19 pandemic.
The collapse signals recession risk and threatens to dampen consumer spending that has been a key driver of economic growth, even as the overall economy continues expanding.
American consumers’ financial optimism deteriorated sharply in January, with confidence falling to levels not seen since May 2014 and dipping below the lows experienced during the COVID-19 pandemic. The Conference Board reported Tuesday that its consumer confidence index declined 9.7 points to 84.5, reflecting mounting concern about both current economic conditions and future prospects.
The decline was broad-based. The index measuring consumers’ short-term expectations for income, business conditions, and the job market fell 9.5 points to 65.1 — well below 80, the threshold that often signals recession risk ahead. This marks the twelfth consecutive month the short-term expectations component has fallen below that warning level. Consumers’ assessment of their current economic situation slid 9.9 points to 113.7.
“Confidence collapsed in January, as consumer concerns about both the present situation and expectations for the future deepened,” said Dana Peterson, the Conference Board’s chief economist. “All five components of the index deteriorated, driving the overall index to its lowest level since May 2014 — surpassing its COVID-19 pandemic depths.”
Consumer Anxiety Mounting
Consumer anxiety centered on several concerns. References to inflation, particularly gas and grocery prices, remained elevated. Mentions of tariffs and trade policy, political concerns, and conditions in the labor market all increased. Consumers also voiced growing anxiety about health insurance and international conflicts.
Labor Market Faltering
The job market showed clear signs of deterioration. Only 23.9% of consumers said jobs were plentiful in January, down from 27.5% in December. Meanwhile, 20.8% reported that jobs were hard to find, up from 19.1% the previous month. The labor market, economists said, has settled into a “low hire, low fire” state as businesses delay hiring decisions amid uncertainty over tariffs and the lingering effects of elevated interest rates.
Hiring has been subdued. Employers added 50,000 jobs in December, slightly above the 56,000 added in November, and the unemployment rate stands at 4.4%. Over the full year 2025, the economy added just 584,000 jobs — sharply less than the more than 2 million jobs added in 2024 and the weakest year for job gains outside a recession since 2003, according to Heather Long, chief economist at Navy Federal Credit Union.
“The dramatic drop in confidence is a direct result of the hiring recession,” Long said. “The fact that 2025 was the weakest year for job gains outside of a recession since 2003 is not going over well with the middle class.” She called for policymakers to focus on affordability and job recovery in 2026.
Economic Growth at Risk
The confidence collapse presents a puzzle for policymakers: the broader economy continues expanding. The U.S. economy grew at its fastest pace in two years during the third quarter, powered by strong consumer spending. Yet that same consumer spending, which has propped up economic growth, may now be at risk as households express deepening doubt about their financial security and employment prospects.