Another significant collapse in U.S. consumer confidence, marking the largest decline in over three years, with short-term inflation expectations soaring to 6%

Following the decline in the University of Michigan Consumer Confidence Index, the U.S. Conference Board Consumer Confidence Index also saw a significant drop in February.

On Tuesday Eastern Time, the World Large Enterprises Federation released data showing that the U.S. Conference Board Consumer Confidence Index fell to 98.3 in February, significantly below the expected 102.5 and the previous value of 104.1. This marks the largest monthly decline since August 2021, a third consecutive month of decline, and the lowest level since June 2024, hovering at the bottom of the range since 2022.

Consumers' Concerns About the U.S. Economic Outlook Intensify, Inflation Expectations Rise Significantly

The survey period extended to February 19, and the decline in confidence was widespread across different age groups and income levels.

Notably, among the five sub-indices of the survey, only the Consumer Present Situation Index showed improvement, with 19.6% of respondents considering the economic situation "good," an increase of 1.1 percentage points from January.

In contrast, the labor market situation indicator, which received significant attention, deteriorated significantly, with 34.4% of respondents believing that job opportunities are "plentiful," while 16.3% felt that "jobs are hard to find." In comparison, these two figures in January were 33.9% and 14.5%, respectively.

The Consumer Expectations Index measuring the next six months also fell by 9.3 points to 72.9, the largest decline in three and a half years, marking the first time since June 2024 that this index has dropped below levels consistent with an economic recession.

Stephanie Guichard, a senior economist at the World Large Enterprises Federation, stated:

“Consumers' perceptions of the current labor market have weakened, pessimism about future business conditions has intensified, and optimism about future income has declined. The pessimism regarding future employment prospects has further escalated, reaching the highest level in ten months.”

Consumers' expectations for future inflation have risen significantly, with the 12-month expected inflation rate increasing to 6%, up from 5.2% in January, far exceeding the Federal Reserve's target of 2%.

Guichard added:

“This increase may reflect the influence of various factors, including persistent inflation and the recent surge in prices of essential household items (such as eggs) and the anticipated impact of tariffs. Mentions of trade and tariffs have surged to levels not seen since 2019. Notably, comments regarding the current government and its policies have dominated.”

Jeffrey Roach, Chief U.S. Economist at LPL Financial, stated:

"We can expect short-term changes in consumer behavior, as consumers are increasingly anxious about the uncertainty of potential tariffs and may engage in preemptive spending to cope with the impending rise in import prices."

Finally, the proportion of consumers expecting an economic recession in the next 12 months has risen to the highest level in 9 months. Consumer optimism about the stock market has also weakened, with only 46.8% of consumers expecting stock prices to rise in the coming year, the lowest proportion since April 2024, down from 54.2% in January.

After the data was released, U.S. 5-10 year Treasury yields fell by as much as 10 basis points, with the 10-year Treasury yield hitting a daily low below 4.2950%, and the 2-year Treasury yield dropping over 8 basis points, also hitting a daily low below 4.09%.