Consumers are spending, but confidence just hit a decade low

American consumers have been the quiet hero of a shaky economy for a while. Even as hiring slowed and uncertainty mounted, household spending kept growth alive.

But the mood is shifting fast, and new data shows consumers feel increasingly squeezed. Economists are starting to worry that confidence might be the next crack to form in the foundation.

The Conference Board weighs in

In its latest confidence index, the Conference Board flashed warnings investors shouldn’t ignore:

• Overall confidence fell to 84.5, the lowest level since 2014
• The expectations index sank to 65.1, its 12th straight month below the 80 reading that historically signals recession risk
• Consumers cited inflation (especially groceries and gas) along with tariffs, politics, healthcare costs, and job worries
• Plans for big-ticket purchases and future services spending weakened, signaling more defensive households

Labor market perceptions also deteriorated, with less than 24% of consumers describing jobs as “plentiful.” That percentage stood at 27.5 last month. Meanwhile, 20.8% say jobs are hard to get, which is the highest reading in months.

Economists point to a stagnant job economy a significant concern, citing labor growth in 2025 that was the weakest since 2003 outside of a recession year. And since confidence tends to run out before spending, analysts are keenly focused on the trend.

A mixed outlook from here

The picture isn’t completely bleak, but it is a complicated one.

On the positive side, retail spending is holding up. The Redbook Index is up 7.1% year over year, suggesting consumers haven’t slammed on the brakes just yet.

But pressure is coming in many forms, including new data showing unemployment ticked up in six states in December. And home prices continue to climb, while mortgage rates hover above 6% to keep affordability out of reach for many Americans.

Meanwhile, research shows unexpected inflation is reshaping long-term decisions, even contributing to lower fertility rates.Consumer spending may be resilient, but confidence is often seen as an early warning system.

For portfolios, this is a call for balance and caution, particularly when chasing growth that depends on an endlessly confident consumer.