Consumers remained cautious on big-ticket spending, but expectations for household finances reached their most positive level in nearly a year.
U.S. consumers grew more hopeful about their future financial prospects in December and edged away from worst-case recession fears, even as overall confidence slipped for a fifth straight month, according to a Dec. 23 report from the The Conference Board.
The Conference Board’s Consumer Confidence Index fell 3.8 points, to 89.1 in December, down from a revised 92.9 in November, reflecting weaker views of current business and labor market conditions. But beneath the headline decline, forward-looking indicators pointed to improving household sentiment, easing inflation anxiety, and a more constructive outlook for markets heading into 2026.
Expectations for families’ future financial situations climbed to their most positive level since January, even as assessments of current finances turned negative for the first time in nearly four years. At the same time, consumers became more optimistic about stock prices, while inflation expectations pulled back following a November uptick.
“The responses continued to skew pessimistic but less so than November,” said Dana Peterson, chief economist at The Conference Board, citing fewer negative comments about prices, inflation, and politics, alongside a rebound in positive sentiment around interest rates following the Federal Reserve’s third rate cut of the year.
The improving forward-looking sentiment comes amid stronger-than-expected economic growth. Real gross domestic product increased at a 4.3 percent annual rate in the third quarter, driven by robust consumer spending and a rebound in exports, according to recently released government data.
Confidence Dips, Outlook Stabilizes
The Conference Board’s Present Situation Index—which measures consumers’ assessment of current business and labor market conditions—fell sharply by 9.5 points, to 116.8, as views on business conditions turned negative for the first time since September 2024. The share of consumers describing jobs as “plentiful” declined to 26.7 percent from 28.2 percent in November, while those saying jobs are “hard to get” ticked up by 0.7 points, to 20.8 percent.
By contrast, the forward-looking Expectations Index held steady at 70.7. While still below the 80 threshold that historically signals recession risk, the stability marked a pause after months of deterioration. Consumers grew moderately less pessimistic about business conditions six months ahead, with fewer respondents expecting conditions to worsen.
Recession fears also eased at the margins. The share of consumers saying a U.S. recession over the next 12 months is “very likely” continued to decline, while those saying a downturn is “not likely” edged higher. The largest share still expects a recession to be “somewhat likely,” but outright alarm has receded from earlier in the year.
By Tom Ozimek
