Economic sentiment hits weakest level since 2014
America’s economic mood deteriorated sharply in January, with consumer confidence falling to its lowest level in more than a decade as households grew increasingly anxious about rising prices, geopolitical tensions and President Donald Trump’s ongoing trade war.
The Conference Board’s Consumer Confidence Index dropped 9.7 points to 84.5, marking its weakest reading since 2014. The decline was steeper than economists expected and even fell below confidence lows recorded during the 2020 pandemic recession and last year’s tariff-related downturn.
Both major components of the index worsened significantly. Americans reported a weaker assessment of current economic conditions, while expectations for the future economy also fell, signaling broad-based pessimism.
Inflation, tariffs and global tensions weigh on outlook
According to The Conference Board, all five components of the index deteriorated in January. References to inflation-related pressures remained elevated, particularly concerns about food, grocery, gas and electricity prices.
Mentions of tariffs, trade policy and political uncertainty also increased. Over the past month, the Trump administration has escalated trade tensions, threatened new tariffs on Canada and European nations, and floated the idea of acquiring Greenland. At the same time, pressure on the Federal Reserve has added to market unease.
Geopolitical worries have also intensified. Survey respondents referenced war and global instability more frequently, compounding fears already fueled by affordability challenges at home.
Cost of living and labor market anxiety persist
High living costs continue to frustrate consumers, particularly as hiring remains sluggish. Many Americans insured through the Affordable Care Act have seen sharp increases in premiums, adding to household financial strain.
Economists warn that the labor market is becoming a growing source of stress. More than 55 percent of respondents said it is difficult to find a job, the highest share since the pandemic. Pessimism about employment prospects is especially acute among recent graduates and workers who have been laid off.
Analysts caution that weak job growth could persist throughout 2026, with some forecasting a rise in the unemployment rate later this year.
Spending may hold up despite gloomy sentiment
Historically, low consumer confidence has not always translated into weaker spending. During previous downturns, including the inflation surge of 2022 and tariff-driven uncertainty last year, Americans continued to spend in the months that followed.
Economists note that this pattern could repeat in early 2026, supported by larger tax refunds and potential fiscal stimulus. The US Treasury projects that average federal income tax refunds could be about $1,000 higher this year, providing temporary relief for many households.
However, analysts warn that the sharp January drop in confidence could signal softer economic activity in the first quarter of 2026, particularly if job growth continues to slow and price pressures remain elevated.