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US consumer confidence has collapsed to its weakest level in more than a decade, outstripping its pandemic lows and fuelling concerns about the health of the world’s biggest economy.
The Conference Board’s consumer confidence index fell to 84.5 in January, well below market expectations and the lowest since May 2014.
“Confidence collapsed in January, as consumer concerns about both the present situation and expectations for the future deepened,” said Dana Peterson chief economist at the Conference Board, a think-tank.
The bleak consumer mood despite recent bumper GDP growth and strong spending data will stoke concerns that the spoils of America’s economic gains are not being evenly distributed.
It comes as Donald Trump, who has struggled to convince voters they are doing better under his presidency than they were under his predecessor Joe Biden, travels to Iowa to kick off a weekly tour to tout his economic achievements.
“The economy is good, it’s all good. Prices are coming way down, and we have a lot of very positive news,” the US president said on Tuesday.
Official data released last week showed annualised GDP growth of 4.4 per cent in the third quarter of 2025, and the Atlanta Federal Reserve forecasts it could jump as high as 5.4 per cent in the final quarter of the year.
Meanwhile, real consumer spending grew 3.5 per cent in the third quarter, according to the Bureau of Economic Analysis, indicating that Americans continue to splash out on purchases.
Analysts said the contrast between that data and the gloomy consumer sentiment suggests an increasingly bifurcated economy in which a rich minority of Americans benefit from a soaring stock market, while the poorer majority struggles with higher prices.
“This divergence likely reflects the narrative that the top 20 per cent of households by income are driving the growth story while the bottom 60 per cent by income are treading water,” said James Knightley, chief international economist at ING.
Thomas Simons, chief economist at investment bank Jefferies, said despite “incredibly strong” growth and productivity numbers for the second half of 2025, “this confidence measure and others are behaving as if the economy is in a recession”.
“More likely than not, this is the consequence of the K-shaped economy, where upper-income, wealthier households are supporting strong consumer spending levels, and lower-income households are increasingly concerned about the labour market and the re-emergence of inflation.”
Retailers and consumer goods companies have pointed to resilience among many customers despite negative sentiment, but there are signs of weakness.
Procter & Gamble, the maker of Tide laundry soap and Pantene shampoo, reported a sales slowdown in the US last week. “Consumers are, in periods of less certainty, sometimes skimping a little bit,” Andre Schulten, chief financial officer, said as P&G results were released.
The 9.7 point drop in the Conference Board’s headline index from an upwardly revised 94.2 in December was its biggest fall in more than four years.
The “present situation” sub-index slipped to 113.7 in January from 123.6 the previous month, its lowest since February 2021. The “expectations” sub-index, meanwhile, fell from 74.6 to 65.1, the lowest since April 2025, when Trump unveiled his “liberation day” tariff plan.
Additional reporting by Gregory Meyer in New York and Lauren Fedor in Washington. Data visualisation by Ian Hodgson in Washington
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