According to the latest data released by The Conference Board, the US December Consumer Confidence Index (CCI) slipped to 84.5, down 4.6 points from the previous value of 89.1, marking the lowest level within 2025. This figure is already below the previous low in March (86.0) and significantly lower than the peak at the end of 2024 (104.1), showing a weak trend of fluctuating decline in consumer confidence throughout the year. The sharp deterioration in the data this time mainly reflects the collapse of household confidence in both current economic conditions and future prospects, with overall sentiment approaching the trough seen during the 2020 pandemic.
Observing the performance of key sub-indices, the current reading of 84.5 hides extremely weak structural concerns. According to market analysis of the data breakdown, the "Present Situation Index," which reflects views on the current economy, has significantly retreated, while the more forward-looking "Expectations Index" has shown a crashing trend, with values far below the "80 Recession Signal" derived from historical experience. This implies that consumers are not only anxious about the current job market but also hold extremely negative views regarding income and the business environment for the next six months; this collapse in "expectations" is typically a precursor to a contraction in real spending.
Regarding the main reasons for the plunge in confidence, analysts from major institutions point out that while inflationary pressure shows signs of easing, absolute price levels remain high. Coupled with the increasingly obvious perception that the labor market is shifting from "overheated" to "cooling," these serve as a double blow to confidence. Some market commentaries also mention that recent uncertainty regarding tariff policies and disturbances in domestic and international political situations have further deepened public insecurity. The Chief Economist at The Conference Board has warned that when the Expectations Index remains depressed for a long period, it usually indicates that the risk of a future economic recession is rising sharply.
Looking ahead, it is difficult to see a V-shaped reversal in consumer confidence in the short term (1-2 months). As financial pressures emerge after the year-end shopping season and corporate hiring turns conservative, consumption momentum in the first quarter may face severe tests. In the medium term (3-6 months), if the Expectations Index cannot recover above 80 quickly, the probability of the US economy falling into a technical recession will increase significantly. Investors need to closely monitor upcoming non-farm payroll data and retail sales figures to determine whether the collapse in confidence has translated into a hard landing for the real economy.
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