A key measure of consumer confidence rose modestly in February, coming in above economist expectations at 91.2. While this represents a slight improvement over January’s reading, the broader trend remains downward when compared to the higher levels seen at the end of 2024.
Digging deeper into the numbers reveals a mixed picture. The index measuring expectations for the future increased, but the index reflecting the present situation dipped slightly. This volatility points to underlying concerns, particularly regarding the labor market. Consumers reported finding jobs less plentiful, viewing low job availability as a key risk to the economy moving forward.
Interestingly, despite the cautious sentiment, plans for big-ticket purchases, like appliances, saw a small uptick in February. This may reflect essential replacements that consumers feel they cannot postpone. However, this minor increase in spending intentions may be overshadowed by broader economic pressures.
Recent economic data shows that consumer spending growth has already begun to slow to a more sustainable rate. A major driver of this slowdown appears to be stalling income growth. In the second half of the previous year, growth in disposable personal income—adjusted for taxes and inflation—slowed to zero. With consumers still concerned about inflation and their purchasing power softening, economists suggest that overall spending growth is likely to slow even further in the coming months.
