U.S. Consumer Confidence Plummets in February, Worst Drop Since 2021

U.S. Consumer Confidence Plummets in February, Worst Drop Since 2021/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. consumer confidence plunged in February, dropping to 98.3 from January’s 105.3—the sharpest monthly decline since 2021, the Conference Board reported. Concerns over persistent inflation and a looming trade war under President Trump fueled the pessimism. Wall Street reacted swiftly, with the S&P 500, Dow, and Nasdaq all falling.

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Consumer Confidence Quick Looks

• Consumer confidence index drops to 98.3 from 105.3 in January
• Biggest monthly decline since August 2021
• Short-term expectations index falls 9.3 points to 72.9 (recession warning below 80)
• Recession fears hit a nine-month high among consumers
• Current conditions assessment dips to 136.5
• Wall Street reacts:
  • S&P 500: -0.7%
  • Dow Jones: -1.7%
  • Nasdaq: -1.4%
• Retail sales fell 0.9% in January, largest monthly drop in a year
• Persistent inflation and Trump’s trade policies cited as growing concerns

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U.S. Consumer Confidence Plummets in February, Worst Drop Since 2021

Deep Look

WASHINGTON — U.S. consumer confidence nosedived in February, marking the largest monthly decline in over four years, as Americans grow increasingly concerned about stubborn inflation and rising trade tensions under President Donald Trump.

The Conference Board’s consumer confidence index fell to 98.3, down from 105.3 in January and far below economists’ forecast of 103 (FactSet). This 7-point drop is the most significant since August 2021.

“Consumers became less optimistic about future income, job prospects, and business conditions,” said Dana Peterson, Chief Economist at the Conference Board.

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Inflation and Trade Tensions Weigh Heavily

The report highlighted a significant uptick in concerns about inflation, which has remained stubbornly above target levels. Mentions of trade and tariffs surged, reflecting worries over Trump’s escalating trade policies—including threatened tariffs on Canadian and Mexican imports set to resume next month.

Consumers’ short-term expectations for the economy plummeted, with that index falling 9.3 points to 72.9—dangerously below the 80 threshold, which often signals a looming recession.

“Expectations have now reached a level consistent with recessionary conditions,” Peterson added.

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Wall Street Feels the Impact

Financial markets responded immediately to the pessimistic data:

• S&P 500: -0.7%
• Dow Jones Industrial Average: -1.7%
• Nasdaq Composite: -1.4%

Investors are increasingly cautious as consumer spending, which drives roughly two-thirds of U.S. economic activity, shows signs of weakening.

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Job Market Sentiment Worsens

Consumers’ view of current conditions dropped 3.4 points to 136.5, while perceptions of the labor market softened further. More Americans expressed doubts about finding new employment and sustaining current income levels.

“Pessimism about future employment prospects reached a ten-month high,” the report noted.

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Retail Sales Slump Adds to Gloom

Compounding consumer concerns, U.S. retail sales dropped 0.9% in January, the largest monthly decline in a year. Harsh winter weather and declining vehicle sales contributed to the downturn.

Despite strong holiday spending at the end of 2024, momentum has faded in early 2025, raising questions about economic resilience in the face of inflation and global trade uncertainty.

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Economic Outlook

While consumer confidence was rising toward the end of 2024, buoyed by holiday spending and moderate economic growth, February’s steep drop signals growing fears of a potential economic slowdown.

With consumer sentiment dipping and recession indicators flashing, economists are watching closely to see if consumer spending retrenches further in the coming months.

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