Consumer Confidence Craters for Fifth Straight Month, Hitting Lowest Level Since Tariff Chaos Began

American consumer sentiment is in freefall. The Conference Board's closely watched Consumer Confidence Index dropped for the fifth consecutive month in December, falling to 89.1 from November's upwardly revised reading of 92.9. This marks the longest losing streak since the dark days of 2008, and the reading sits perilously close to April's 85.7 trough—when the initial wave of Trump administration tariffs sent shockwaves through the economy.

A Tale of Two Indexes

The December report revealed a troubling divergence in how Americans view their present circumstances versus their future prospects. The Present Situation Index—which measures consumers' assessment of current business and labor market conditions—plummeted by a striking 9.5 points to 116.8, signaling that the economic reality on the ground is deteriorating faster than many had anticipated.

Meanwhile, the Expectations Index held steady at 70.7, but this stability is cold comfort. The gauge has now tracked below 80 for 11 consecutive months—a threshold that historically signals a recession may be on the horizon.

"Despite an upward revision in November related to the end of the shutdown, consumer confidence fell again in December and remained well below this year's January peak. Four of five components of the overall index fell, while one was at a level signaling notable weakness."

— Dana M. Peterson, Chief Economist, The Conference Board

What's Weighing on American Minds

The survey's write-in responses paint a vivid picture of consumer anxiety. The top concerns continue to be prices and inflation, tariffs and trade policy, and politics. These themes have dominated sentiment throughout 2025, creating a persistent cloud of uncertainty over household spending decisions.

Perhaps most alarming is the collapse in how Americans view their own financial situations. For the first time in nearly four years, consumers' net views of their family's current financial situation have turned negative. This shift represents a fundamental change in how households perceive their economic well-being—and could have significant implications for consumer spending in the months ahead.

Labor Market Cracks Widen

The jobs picture is also showing signs of strain. According to the survey, only 26.7% of consumers said jobs were "plentiful," down from 28.2% in November. At the same time, 20.8% reported that jobs were "hard to get," up from 20.1% the previous month. While these shifts may seem modest, they represent a clear directional change that suggests the robust labor market of recent years may finally be cooling.

The labor market differential—the gap between those saying jobs are plentiful versus hard to get—narrowed to just 5.9 percentage points. A year ago, this spread was nearly double, underscoring how quickly conditions have deteriorated.

The Spending Paradox

Here's the puzzle that has economists scratching their heads: despite cratering confidence, consumer spending has remained relatively resilient throughout 2025. Holiday spending rose 4.2% this year, and retail sales have held up better than sentiment readings would suggest.

This disconnect may be explained by what economists call "revealed preferences"—what people do versus what they say. While consumers tell surveyors they're pessimistic about the economy, many continue to spend, perhaps because their actual financial situations are better than their perceptions suggest, or because spending habits are slow to change even as attitudes shift.

However, history suggests this gap cannot persist indefinitely. When confidence eventually catches up to behavior—or vice versa—the adjustment can be swift and painful.

What It Means for 2026

The sustained weakness in consumer confidence raises serious questions about economic momentum heading into the new year. Consumer spending accounts for roughly 70% of U.S. economic activity, making it the engine that drives growth. If the pessimism reflected in the Conference Board's survey eventually translates into reduced spending, the economy could face significant headwinds.

For investors, the message is clear: don't ignore sentiment. While markets have shrugged off weak confidence readings so far, betting against the American consumer for an extended period is historically a losing proposition. The five-month losing streak in confidence—tied for the longest since the financial crisis—demands attention.

As 2025 draws to a close, the gulf between Wall Street's optimism and Main Street's pessimism has rarely been wider. Something will have to give in 2026.