Key Points

  • Consumer confidence edged higher this month as the labor market showed signs of stabilizing and consumers grew more optimistic about job availability, according to a survey released Tuesday by The Conference Board.
  • The share of consumers saying jobs are plentiful rose to 28%, a three-month high, while the gap with those saying jobs are hard to get widened to 7.4 percentage points, also the highest in three months.
  • "Consumers' pessimism about the future economy has eased," Dana Peterson, chief economist at The Conference Board, said in a statement. She noted that the consumer confidence index rose 2.2 points to 91.2, "but the index remains well below the four-year peak reached in November 2024."

In-Depth Analysis

The modest rebound in confidence reflects consumers' caution amid mixed signals in economic data. "Consumers' written responses about factors affecting the economy remain tilted toward pessimism," Peterson said. "Comments about prices, inflation, and the cost of goods remain the top concern for consumers."

The Federal Reserve's preferred inflation gauge—the core Personal Consumption Expenditures (PCE) price index, which excludes food and energy costs—has remained above the central bank's 2% target for nearly five years. Data released Friday by the U.S. Bureau of Economic Analysis showed core PCE rose 3% year over year in December, up from 2.8% in November.

Additionally, Bureau of Economic Analysis data showed the economy grew at an annualized rate of just 1.4% in the fourth quarter, below expectations, dragged down by the federal government shutdown and weak exports. Meanwhile, the U.S. Bureau of Labor Statistics said this month that the unemployment rate fell 0.1 percentage point to 4.3% last month, with employers adding 130,000 jobs, far exceeding hiring expectations.

"I'm more worried about inflation right now because I think the job market is fairly stable," Austan Goolsbee, president of the Chicago Fed, said Tuesday. "I think growth is fairly stable," he said in an interview with Bloomberg Television. "There's some encouraging content in the inflation report, but there are also some warning signs."

Still, the central bank could lower borrowing costs this year. "I'm not hawkish on rates," he said. "I'm fairly optimistic about multiple rate cuts in 2026, as long as inflation begins to decline as forecasters expect."

The Conference Board said consumers' inflation expectations remained elevated this month, and they expect interest rates to stay high over the next 12 months. "Consumers are frustrated by high prices and a lack of job opportunities," said Heather Long, chief economist at Navy Federal Credit Union. "Americans are clearly still worried about the economy, but they no longer think it's getting worse," she wrote in the report. "Recession fears are fading, and interest in buying big-ticket items like cars, furniture, or televisions is rising again."

Peterson noted that compared with January, consumers' mentions of trade and politics increased this month, based on written responses in The Conference Board's survey. The survey's cutoff date was February 17, before the Supreme Court ruled that most tariffs imposed by President Trump since April 2025 were illegal.