American consumer confidence took a notable step back in December, as persistent worries about high prices and the economic impact of sweeping import tariffs weighed on household sentiment.
Key Confidence Indicators Decline
The Conference Board reported on Tuesday that its closely watched consumer confidence index fell by 3.8 points to 89.1 in December. This followed a revised November reading of 92.9. The latest figure brings confidence close to the 85.7 level recorded in April 2025, which coincided with the initial rollout of President Donald Trump's tariffs on key U.S. trading partners.
Consumers' assessment of their current economic situation saw a sharp decline, dropping 9.5 points to 116.8. Meanwhile, a separate measure tracking short-term expectations for income, business conditions, and the labor market held steady at 70.7. However, this marks the 11th consecutive month this gauge has remained below 80, a threshold economists watch as a potential signal of a future recession.
Inflation and Tariffs Top List of Concerns
When asked to specify their primary worries, consumers pointed overwhelmingly to prices, inflation, and tariffs. This sentiment reflects ongoing economic pressures facing American households.
The perception of the job market also deteriorated this month. The survey found that 26.7% of consumers believed jobs were "plentiful," down from 28.2% in November. Conversely, 20.8% said jobs were "hard to get," an increase from 20.1% the previous month.
A Stalled Labor Market
Recent government data underscores a cooling employment landscape. While the economy added a healthy 64,000 jobs in November, it had lost 105,000 positions in October. The national unemployment rate rose to 4.6% last month, reaching its highest point since 2021.
Economists describe the current labor market as being in a "low hire, low fire" state. Businesses appear to be holding steady on hiring, likely due to uncertainty stemming from Trump's tariff policies and the lingering effects of elevated interest rates. Since March, monthly job creation has averaged just 35,000, a significant slowdown from the 71,000 average in the year ending last March. Federal Reserve Chair Jerome Powell has suggested these job figures may later be revised even lower.
The December confidence data paints a picture of an American public growing increasingly cautious. With inflation and trade policy remaining at the forefront of economic concerns, the trajectory of consumer spending and economic growth in the new year faces clear headwinds.
