Confidence index slides for fifth straight month
U.S. consumers are closing the year in a noticeably pessimistic mood. The Conference Board reported that its consumer confidence index fell 3.8 points in December to 89.1, marking the fifth consecutive monthly decline. The drop reflects weaker views on current business conditions and the labor market compared with November.
At the same time, consumers’ expectations for the near future remained below the threshold that historically signals a recession. This forward-looking gauge has now stayed in negative territory for 11 straight months, underscoring persistent unease about the economic outlook.
Holiday spending contrasts with sour sentiment
The deterioration in sentiment comes during the peak holiday shopping season, a period typically associated with stronger confidence. According to Yelena Shulyatyeva, senior U.S. economist at The Conference Board, consumers’ assessment of current conditions worsened sharply in December, highlighting growing anxiety despite ongoing spending.
This caution stands in contrast to recent economic growth data. On Tuesday, the Bureau of Economic Analysis said U.S. gross domestic product expanded at an annualized rate of 4.3% in the third quarter, exceeding expectations and driven largely by consumer spending.
Rising costs and shutdown dampen momentum
Despite the strong third quarter performance, economists warn that the underlying momentum may already be fading. Rising living costs and the recent federal government shutdown have weighed on household confidence, creating a gap between backward-looking growth data and more timely sentiment indicators.
Shulyatyeva noted that this divergence suggests caution is warranted when interpreting headline GDP figures. Taken together, the data point to a likely economic slowdown heading into 2026, she said.
Officials see improvement ahead
Government officials are more optimistic about the medium-term outlook. Joe Lavorgna, counselor to Treasury Secretary Scott Bessent, said it would take time for recently enacted policies to translate into higher wages and job growth. However, he expects tangible benefits to emerge next year.
Lavorgna emphasized that measures such as eliminating taxes on tips and overtime pay are expected to lift after-tax wages in 2026. He also forecast that full year GDP growth could reach around 3%, supporting stronger employment and income gains.
Other surveys echo consumer concerns
The downbeat tone is consistent with other measures of sentiment. The University of Michigan’s final consumer survey for December showed Americans felt more negative about the economy than a year earlier, even though sentiment improved slightly from November.
Many respondents expect unemployment to rise over the coming year. Official data show the jobless rate at its highest level in four years, while annual inflation, currently at 2.7%, is beginning to show tentative signs of cooling. Still, the combination of labor market concerns and cost pressures continues to weigh heavily on consumer confidence.
