Consumers send mixed signals as confidence declines in January

U.S. consumer confidence declined in January as concerns about the economy over the next year clouded their thinking.

The news: The Conference Board Consumer Confidence Index fell in January to 107.1, down from an upwardly revised 109 in December.

But there’s nuance between how consumers view today and the next year. Consumers’ view of the present economic situation and labor market conditions ticked up. The fall in optimism was observed in the short-term outlook, indicating there are concerns about where the economy is heading in the next six months.

“Consumers were less upbeat about the short-term outlook for jobs,” said Ataman Ozyildirim, senior director of economics at The Conference Board. “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.”

Purchasing plans were another area of mixed messages. Consumers held steady in their thinking about buying autos and appliances, but fewer consumers are planning to buy a home.

On inflation, expectations ticked up. Consumers now see inflation at 6.8% over the next year, as opposed to 6.6% a month ago. Yet this is down from the peak of 7.9% observed in June 2022.

Key demographic stat: “Consumer confidence fell the most for households earning less than $15,000 and for households aged under 35,” said Ozyildirim.

It’s a reminder: This more difficult economic moment likely isn’t affecting everyone in the same way.