Credit: David Paul Morris/Bloomberg.
U.S. consumer confidence unexpectedly fell in January to a four-month low on less optimism about the labor market and the outlook for the broader economy.
The Conference Board’s gauge of consumer confidence decreased 5.4 points, to 104.1, this month, according to data released today. The median estimate in a Bloomberg survey of economists had called for a reading of 105.7.
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A gauge of sentiment about current economic conditions dropped nearly 10 points, while the group’s measure of expectations for the next six months declined to a lesser extent.
Inflation is easing only gradually, and while the labor market looks good on paper, job seekers say that it’s taking longer and longer to find work. Sentiment has also been shaky because consumers are assessing how Donald Trump’s policies will affect the economy.
The proportion of consumers who said that jobs are currently plentiful fell this month to the lowest since September, and a larger proportion said jobs are hard to get. The difference between these two responses—a metric closely followed by economists to gauge the job market—narrowed by the most since April. “The return of pessimism about future employment prospects seen in December was confirmed in January,” Dana Peterson, chief economist at The Conference Board, said in a statement.
Meanwhile, buying conditions for big-ticket items such as cars, houses, and appliances softened. That likely reflects still-elevated prices, as well as high borrowing costs, with the Federal Reserve poised to hold interest rates at an elevated level at its meeting this week. Expectations of inflation over the coming year increased. Other measures of the inflation outlook have also picked up recently as consumers worry about potential tariffs from the Trump administration. In write-in responses to the survey, more than half of consumers said now they expect higher interest rates over the next 12 months.
Weaker income prospects likely dampened consumers’ vacation plans, which dropped this month to the lowest since October 2022—particularly for international travel and other travel by plane.
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