Decline in US Consumer Confidence Signals Economic Challenges Ahead

In November 2025, the US Consumer Confidence Index® witnessed a notable decline, falling by 6.8 points to 88.7, a significant drop from 95.5 in October. This decline in consumer confidence reflects a growing pessimism among consumers regarding their current economic conditions and future outlook. Key indicators contributing to this decline include the Present Situation Index, which assesses current business and labor market conditions, and the Expectations Index, which gauges consumers' outlook on the economy moving forward.

Present Situation and Expectations

The Present Situation Index plummeted by 4.3 points to 126.9, showing a deterioration in consumers' perceptions of ongoing business and labor market conditions. Alongside this, the Expectations Index faced a sharper decline, dropping 8.6 points to 63.2. Notably, the Expectations Index has lingered below the 80-point threshold for ten consecutive months, a level often indicative of impending recessionary conditions.

Dana M Peterson, Chief Economist at The Conference Board, remarked that consumer confidence in November fell to one of its lowest levels since April, following a period of relative stability. Each of the five components of the overall index either flagged or remained weak, with consumers expressing heightened concerns about their financial situations now and in the future.

Demographic Insights

When examining consumer confidence across demographic groups, younger consumers under 35 demonstrated a slight improvement in confidence. However, older consumers aged 35 and above witnessed declines, with those aged 55 and older expressing the most negative outlook. Confidence dropped across various income brackets, with only consumers earning less than $15,000 showing a marginal improvement, yet they still remained the least optimistic group.

Interestingly, there was a notable withdrawal in confidence among independent voters, a demographic that has seen a significant shift in perspective regarding economic health. Consumers' responses commonly cited inflation, tariffs, political factors, and the federal government shutdown as primary influences on their economic sentiments.

Inflation and Economic Outlook

In November, consumers maintained elevated inflation expectations with the median rate rising to 4.8%. About half of the consumers surveyed anticipated interest rates would rise, indicating a cautious outlook on borrowing and spending. Despite these concerns, consumers remained generally optimistic about stock prices over the next year, albeit slightly less confident than in previous months.

The mood surrounding family financial situations also took a downturn; perceptions of current financial health hit their lowest since August 2024, a period marked by economic turbulence. Expectations surrounding personal financial futures reflected a lack of optimism, with more consumers predicting a recession over the next twelve months.

Consumer Spending Trends

In light of this low consumer confidence, plans for purchasing significant items over the next six months have diminished. After showing some signs of recovery earlier in the year, expectations for buying cars and household electronics have indeed regressed, although certain categories like used cars and televisions remain popular choices.

Moreover, consumer intentions regarding spending on services have sharply decreased. Most categories surveyed indicated a planned reduction in expenditures, with notable exceptions for historic sites and childcare services. The findings also show a maintained preference for essential services over higher-end discretionary expenses, revealing a trend towards thriftiness.

Travel intentions for vacations saw a decline after an unexpected increase in October, suggesting that households may prioritizing immediate financial needs over leisure expenditures.

Conclusion

In conclusion, the considerable drop in US consumer confidence serves as a crucial barometer of economic sentiment as 2025 progresses. The combined factors of inflation, political factors, and labor market uncertainties appear to intertwine, producing a climate of economic cautiousness and pessimism among consumers. Keeping an eye on these trends will be essential for understanding the broader implications for the economy as we move into 2026 and beyond.