The Conference Board: Consumers’ Short-Term Outlook May Signal Coming Recession 

Consumer confidence dipped in January after rising in December, according to The Conference Board.

The not-for-profit think tank said in a Tuesday (Jan. 31) press release that U.S. consumers’ assessment of current business and labor market conditions was more favorable than it was last month, but their short-term outlook for income, business and labor market conditions soured.

The latter metric, the Expectations Index, fell below 80 — a landmark number that often signals a recession within the next year, according to the press release.

Overall, consumer confidence remains above where it was in July, which was the lowest level seen in 2022. The January drop was especially pronounced among households earning less than $15,000 and those aged under 35.

“Consumers were less upbeat about the short-term outlook for jobs,” The Conference Board Senior Director of Economics Ataman Ozyildirim said in the release. “They also expect business conditions to worsen in the near term. Despite that, consumers expect their incomes to remain relatively stable in the months ahead.”

Breaking down different components of the findings, The Conference Board reported that, when looking at the present situation, consumers assessed both business conditions and the labor market as being more favorable in January than they were in December.

Asked what they expected six months from now, consumers become more pessimistic about the outlook for both business conditions and the labor market, while saying their income prospects held steady in relation to December.

“Meanwhile, purchasing plans for autos and appliances held steady, but fewer consumers are planning to buy a home — new or existing,” Ozyildirim said in the release. “Consumers’ expectations for inflation ticked up slightly from 6.6% to 6.8% over the last 12 months, but inflation expectations are still down from its peak of 7.9% last seen in June.”

PYMNTS reported Friday (Jan. 27) that recent earnings from Visa, Mastercard and American Express show that consumer spending was buoyant during the last quarter, but Friday headline data from the Commerce Department showed that U.S. households curbed their spending in December, the last month of the quarter.