Dive Brief:
- Consumer confidence rose slightly this month as signs that the labor market is firming triggered a brighter view of job availability, the Conference Board said Tuesday, describing results of a survey.
- The share of consumers who say jobs are plentiful increased to a three-month-high of 28%, widening the gap with those who say jobs are scarce to 7.4 percentage points, a three-month high, the Conference Board said.
- “Consumers’ pessimistic expectations for the future eased somewhat,” Conference Board Chief Economist Dana Peterson said in a statement, noting that the Consumer Confidence Index increased 2.2 points to 91.2. “Nonetheless, the measure remained well below the four-year peak achieved in November 2024.”
Dive Insight:
The slight gain in confidence reflects consumers’ caution as economic data telegraph mixed signals.
“Consumers’ write-in responses on factors affecting the economy continued to skew towards pessimism,” Peterson said.
“Comments about prices, inflation, and the cost of goods remained at the top of consumer’s minds,” she said.
The Federal Reserve’s preferred measure of inflation — the personal consumption expenditures price index, excluding food and energy costs — has persisted above the central bank’s 2% target for nearly five years.
So-called core PCE increased 3% in December from a year earlier compared with a 2.8% gain in November, the Bureau of Economic Analysis said Friday.
Also, the economy during the fourth quarter grew at a less-than-forecast annualized pace of 1.4%, slowed by the federal government shutdown and flagging exports, the BEA said.
Meanwhile, unemployment fell last month by 0.1 percentage point to 4.3%, the Bureau of Labor Statistics said this month, as employers added 130,000 jobs in a hiring surge that far exceeded expectations.
“I am a little more concerned about inflation right now, because I think the job market is pretty steady,” Chicago Fed President Austan Goolsbee said Tuesday.
“I think growth is pretty steady,” he said during a Bloomberg Television interview. “I think there's some promising stuff in the inflation reports, but there's also some warning signs.”
Nevertheless, the central bank will probably be able to trim borrowing costs this year.
“I'm not hawkish about rates,” he said. “I'm pretty optimistic that we can get rates down further, multiple cuts in 2026, as long as we see the progress on inflation that forecasters have been forecasting that it's supposed to start coming down.”
Consumer expectations for inflation this month remained elevated, and they said interest rates will persist at a high level during the next 12 months, the Conference Board said.
“Consumers are frustrated about high prices and a lack of job opportunities,” Navy Federal Credit Union Chief Economist Heather Long said.
“Americans are clearly still concerned about the economy, but they no longer think it’s getting worse,” she said in a note. “Recession fears are declining and interest in buying a big-ticket item such as a car, furniture or TV is ticking up again,” she said.
Consumer references to trade and politics rose this month compared with January, Peterson said, referring to write-in responses to the Conference Board survey.
The cutoff date for the survey was Feb. 17, before the Supreme Court ruled that most of the tariffs imposed by President Donald Trump since April 2025 are illegal.
