American consumer confidence has fallen through the floor, landing at levels last seen when Tony Abbott was still the Australian prime minister and the iPhone 6 was considered cutting-edge technology.
The Conference Board’s January reading of 84.5 isn’t so much a bad number as it is a warning flare fired from the suburban checkout line, with consumers' hip pockets feeling the brunt of the pain.
Wall Street shrugs these numbers off as noise, with share traders acting as if sentiment surveys are an indulgence for economists with too much time on their hands.
But consumer confidence isn’t about what Americans bought yesterday, it’s about what they’re scared to buy tomorrow.
Two ideas sit at the centre of this slump.
The first is the labour market, the second is affordability; both are being treated by the Trump administration as if they’re unrelated annoyances rather than symptoms of the same illness.
Fewer than one in four Americans now believe work is plentiful.
The so-called labour market differential, aka the gap between people who say jobs are easy to get and those who say they’re scarce, has collapsed to levels that usually come with rising unemployment.
When households sense that hiring has stalled, they don’t wait for the pink slip.
They pull back early, cancelling holidays, deferring big purchases and hoarding cash they don’t really have.
This matters because the U.S. economy has been propped up by consumption, not production.
Spending has been driven by higher-income households in what economists politely call a K-shaped economy - one where the rich keep climbing while everyone else flatlines.
The grim reality is that this imbalance is now bleeding into confidence data.
Older Americans and both low- and middle-income earners are the most pessimistic, and when anxiety spreads beyond the margins, growth loses its shock absorbers.
Then there’s affordability, the word Trump keeps promising to wrestle to the ground.
Prices remain the dominant grievance in survey responses: notably food, fuel and insurance.
Unsurprisingly, tariffs, Trump’s signature economic weapon, are mentioned almost as often as groceries.
That’s no coincidence, given that tariffs are taxes paid by consumers, dressed up as patriotism.
They push up input costs, squeeze margins and quietly land on household bills.
You can’t declare victory over inflation while importing it container by container.
Meanwhile, housing shows the contradiction in sharp relief.
The administration has talked tough on investors buying homes and even flirted with supporting mortgage markets.
However, the fundamentals haven’t shifted, and building is constrained by high material costs, labour shortages worsened by immigration crackdowns, and local regulations no tweet can bulldoze.
Supply stays tight, prices stay high, and first-home buyers stay locked out.
The Federal Reserve, for its part, is expected to sit on its hands with interest rates likely to stay where they are, not because households feel secure, but because the Fed is watching employment data that hasn’t yet cracked.
This gap between lived experience and official statistics is where political trouble festers; people don’t vote on basis points; they vote on whether life feels harder than it should.
Trump’s defenders will point to GDP growth and say the economy is roaring.
However, that argument rings hollow when confidence is acting as if a downturn is already here.
Admittedly, it’s possible that consumers are wrong; sentiment surveys have cried wolf before.
But when pessimism is broad-based, tied to jobs, prices and policy, it deserves more than a dismissive shrug.
What makes this moment different is that the fear isn’t abstract, it’s specific, and Americans are telling pollsters they see fewer jobs, higher bills and a government more interested in trade fights than household maths.
