Economic Growth Fails to Boost Declining Consumer Confidence
American consumers are expressing increased concerns about the economy, as indicated by a recent survey conducted by The Conference Board. Consumer confidence dropped by 3.8 points to 89.1 in December, following an upwardly revised figure of 92.9 in November. This decline is reminiscent of the index’s levels recorded earlier this year.
Economic Growth and Consumer Sentiment
Despite economic growth, consumer confidence has not improved. According to Dana Peterson, the chief economist at The Conference Board, four out of five components of the consumer confidence index fell in December. One component indicates notable weakness, highlighting ongoing consumer concerns.
Consumer Confidence Index
- December Index: 89.1
- November Index: 92.9 (revised)
- January Peak: Consumer confidence has not returned to this high since.
Americans’ short-term expectations regarding income, business conditions, and job availability remained stable at 70.7. However, this figure is significantly below the 80-mark often associated with potential recession signals. This marks the eleventh consecutive month under this threshold.
Current Economic Situation Assessment
Consumers reported a sharp decline in their assessment of current economic conditions, dropping 9.5 points to 116.8. Concerns over prices and inflation persist as the leading issues among consumers, closely followed by tariffs.
Job Market Perceptions
- Jobs Considered Plentiful: 26.7% (down from 28.2% in November)
- Jobs Hard to Get: 20.8% (up from 20.1% in November)
Peterson noted that consumers’ commentary on the economy included growing mentions of factors like immigration, war, and personal finance topics, including interest rates and taxes.
GDP Growth vs. Consumer Spending
Interestingly, while consumer sentiment declined, the U.S. economy showed robust growth. Federal data revealed a strong gross domestic product (GDP) increase of 4.3% in the third quarter, the highest growth rate in two years. Yet, discrepancies remain between consumer confidence and spending patterns.
Labor Market Overview
The Labor Department’s recent report indicated that in November, the economy added 64,000 jobs, but October experienced a loss of 105,000 positions. The unemployment rate also increased to 4.6%, the highest since 2021. Job creation has averaged just 35,000 each month since March, a drop from 71,000 in the previous year.
According to Matthew Martin, a senior U.S. economist at Oxford Economics, the current perceptions of the economy reflect the lowest levels in five years. He emphasized that the combination of rising prices, a weakening labor market, and the diminishing effects of the government shutdown are certainly contributing to the overall decline in consumer confidence.
