Consumer Confidence Dips In December

Consumer confidence slowed in December as Americans expressed less optimism about the country’s economic health.

The Conference Board Consumer Confidence Index declined by 8.1 points in December to 104.7 (1985=100). The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell 1.2 points to 140.2. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—tumbled 12.6 points to 81.1, just above the threshold of 80, which usually signals a recession ahead. The cutoff date for preliminary results was December 16, 2024.

“The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years,” said Dana M. Peterson, chief economist at The Conference Board. “While weaker consumer assessments of the present situation and expectations contributed to the decline, the expectations component saw the sharpest drop.”

Peterson noted that consumer views of current labor market conditions continued to improve, consistent with recent jobs and unemployment data, but their assessment of business conditions weakened. Compared to last month, consumers in December were substantially less optimistic about future business conditions and incomes. Moreover, pessimism about future employment prospects returned after cautious optimism prevailed in October and November.

Among age groups, December’s fall in confidence was led by consumers over 35 years old; consumers under 35 became more confident. Among income groups, the decline was concentrated in consumers with household earnings between $25,000 and $100,000, while consumers at the bottom and top of the income range reported only limited changes in confidence. On a six-month moving average basis, consumers aged under 35 and those earning over $100,000 remained the most confident.

Average 12-month inflation expectations stabilized at 5% in December, the lowest since March 2020. Additionally, references to inflation and prices dominated write-in responses. Asked what goods and services they expect to be more affordable in 2025, consumers mostly selected food and gas. 
Consumers’ assessments of current business conditions eroded somewhat in December with 19.1% of consumers saying business conditions were “good,” down from 21.6% in November. Additionally, 16.7% said business conditions were “bad,” up from 15.3%.