On 27/1, the Conference Board, a research organization, announced that the US consumer confidence index for January reached only 84,5 points, its lowest level since 5/2014. Economists surveyed by Reuters had previously predicted a figure of 90,9 points.

The decline was widespread, affecting consumers across all political affiliations and income brackets. The sharpest drops were observed among those aged 35 and older, households earning less than 15.000 USD annually, and those with incomes starting from 50.000 USD.

Confidence also eroded among higher-income groups, which have recently been a key driver of US spending. Economists refer to this as a "K-shaped spending model," which has helped sustain the economy even as job growth nearly stalled.

People shop at a shopping center in Pennsylvania, US. *Photo: Reuters*

This trend could intensify pressure on the administration of US President Donald Trump to address the affordability crisis. Economists and opposition figures attribute the problem to Trump's policies, including large-scale import tariffs.

While the connection between consumer confidence and actual spending is often weak, some economists are concerned by the decline in confidence coupled with negative assessments of the labor market. Consumers' outlook on job availability has dropped to its lowest point in nearly 5 years.

"Recent confidence indices often overstate the extent of spending weakness. However, we would be very surprised if this signal were entirely incorrect, especially with real incomes largely stagnant and personal savings rates at very low levels", said Oliver Allen, chief economist at Pantheon Macroeconomics.

"Many people continue to mention prices, inflation, gasoline costs, food, and groceries", noted Dana Peterson, chief economist at the Conference Board.

The percentage of consumers who consider jobs "plentiful" fell to 23,9%, its lowest since 2/2021. Almost 21% described jobs as "hard to get," also a 5-year high.

The number of consumers planning to purchase big-ticket items in the next 6 months has declined. Vacation plans are also less common. The number of individuals intending to buy a home is currently at a 9-month low.

Ha Thu (Reuters)