Consumer confidence drops this month, potentially signaling a slowing economy

Consumer confidence turned negative in February due to concerns about persistent inflation and other economic uncertainties, a key index reported Tuesday.

The Conference Board Consumer Confidence Index dropped 7 points to 98.3, “the largest monthly decline since August 2021,” said Stephanie Guichard, a senior economist at the Conference Board’s Global Indicators.

The index measures the short-term outlook for income, business and labor market conditions.

“Views of current labor market conditions weakened,” she said. “Consumers became pessimistic about future business conditions and less optimistic about future income. Pessimism about future employment prospects worsened and reached a 10-month high.”

The stock market reacted poorly because confidence was lower than expected, with major indexes opening Tuesday’s trading in negative territory. The Nasdaq led the crash, falling almost 2%.

Confidence was down across all age groups but deepest among consumers 35 to 55 years old.

Similarly, a University of Michigan survey on Friday found consumer sentiment dropped 10% from January to February, resulting in its lowest reading since November 2023.

The falling index could be viewed as a warning sign for the Trump administration and its fast-moving plans.

President Trump promised to rein in inflation, though prices for eggs and other products remain high after one month of his term.

The president says it will take some time to bring down prices. He wants to unleash American oil and gas supplies, saying lower energy costs will have a positive trickle-down effect on overall costs.

At the same time, he’s threatening to impose large tariffs on products from friendly and rival nations alike, saying they would raise revenue and protect American industries. Some economists warn that tariffs will cause prices to rise as importers and retailers pass along the cost of the levies to consumers.

Ms. Guichard said concerns about inflation and administration plans were evident in the online survey that forms the index.

“References to inflation and prices in general continue to rank high in write-in responses, but the focus shifted toward other topics,” she said. “There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019. Most notably, comments on the current administration and its policies dominated the responses.”