The US consumer confidence index saw a significant drop in December, indicating weakening economic expectations and signaling a possible recession.

According to the latest data from The Conference Board, the Consumer Confidence Index for December fell by 8.1 points to 104.7 points. The Present Situation Index (based on consumers' assessment of current business and labor market conditions) fell by 1.2 points to 140.2 points. The Expectations Index (reflecting consumers' short-term outlook on future income, business, and labor market conditions) plummeted by 12.6 points to 81.1 points, just slightly above the threshold of 80 points, which typically signals an impending economic downturn. The data for this report was collected up to December 16, 2024. Confidence drops to mid-level in nearly two years Dana M. Peterson, Chief Economist at The Conference Board, said, "Consumer confidence in December failed to sustain the previous rebound, falling to a mid-level seen in the past two years. Weak assessments of the present and future led to this decline, with the most significant drop seen in the Expectations Index. While consumers' views on the current labor market improved, consistent with recent employment and unemployment data, their assessment of the business environment significantly deteriorated. Compared to last month, consumers in December showed a significant decrease in optimism about future business conditions and income, as well as a return to pessimism about job prospects, offsetting the cautious optimism seen in October and November." In terms of age, the decline in consumer confidence in December was mainly concentrated among those aged 35 and older, while confidence among consumers under 35 increased slightly. In terms of income, consumers with household incomes between $25,000 and $100,000 showed the most significant decline in confidence, while those with incomes around this range showed less fluctuation. Calculated on a six-month moving average, consumers under 35 and those with incomes over $100,000 remained the most confident groups. Peterson also noted a decrease in consumer optimism regarding the stock market in December. The percentage of consumers expecting stock prices to rise in the next year decreased from 57.2% in November to 52.9%, while the percentage expecting prices to fall increased from 21.7% to 25%. Furthermore, the percentage of consumers expecting interest rates to rise in the next year increased to 48.5%, but remained near recent lows, while the percentage expecting rates to fall decreased to 29.3%. Consumers significantly weakened their assessment of their household financial situation in the next 12 months. However, inflation expectations remained stable in December, with an annualized inflation expectation of 5.0%, the lowest level since March 2020. In open-ended responses, consumers mainly mentioned inflation and pricing issues, with food and gasoline considered the most likely commodities to become more affordable in 2025, while gym fees and live events (such as concerts and sports events) were seen as the least likely to decrease. On a six-month moving average basis, consumer plans to buy a home slightly declined in December, possibly related to the increase in mortgage rates, while plans to buy a car continued to increase. Furthermore, the percentage of consumers planning to purchase durable goods (such as furniture and appliances) remained low, but intent to spend on services increased, especially in dining and streaming. On the other hand, consumption plans for travel and movies decreased, while intent to spend on personal care and medical expenses increased. In terms of factors influencing economic views, consumer mentions of political issues (including the election results in November) increased in December, as did mentions of tariffs. A special survey conducted this month showed that 46% of US consumers expect tariffs to increase living costs, while 21% expect tariffs to create more job opportunities. Specific data on Present Situation and Expectations Index The Present Situation Index showed a deterioration in consumers' assessment of current business conditions in December: 19.1% of consumers considered business conditions to be "good," down from 21.6% in November; 16.7% of consumers considered business conditions to be "bad," up from 15.3% in November. However, there was an improvement in the assessment of the labor market: 37.0% of consumers believed jobs were "plentiful," up from 33.6% in November; 14.8% of consumers believed jobs were "hard to get," down from 15.2% in November. The Expectations Index showed a drop in confidence among consumers regarding future business conditions: 21.7% of consumers expected future business conditions to improve, down from 24.7% in November; 18.3% of consumers expected business conditions to worsen, up from 15.9% in November. At the same time, expectations regarding future employment and income were also pessimistic: 19.1% of consumers expected job opportunities to increase, down from 22.8% in November; 21.3% of consumers expected job opportunities to decrease, up from 17.9% in November; 17.2% of consumers expected income to increase, down from 20.7% in November; 14.3% of consumers expected income to decrease, up from 12.1% in November.