(Yahoo!Finance) - Consumers are ending the year on a dour note.
The Conference Board’s reading for consumer confidence ticked 3.8 points lower in December to reach 89.1, according to data released Tuesday, sliding lower for the fifth month in a row.
Consumers’ take on current business and labor market conditions also dropped compared to November, while their short-term outlook remained below the level that signals a recession ahead for the 11th consecutive month.
"Consumers are feeling worse and worse," said Yelena Shulyatyeva, senior US economist at The Conference Board, pointing to December declines in feelings about current conditions — just as people are doing their holiday shopping.
Meanwhile, the Commerce Department's Bureau of Economic Analysis reported Tuesday that the US economy grew faster than expected in the third quarter, driven by robust consumer spending. Gross domestic product increased at a 4.3% annualized rate last quarter.
But the momentum appears to have faded already amid the rising cost of living and the recent government shutdown.
"I think that is telling us that we should not be overexcited about the GDP numbers," Shulyatyeva said. "There's a big contrast between the actual data, which is lagged, and the more forward-looking index of consumer confidence," she said, adding that those factors taken together mean to expect a slowdown going into 2026.
Joe Lavorgna, counselor to Treasury Secretary Scott Bessent, says it will take time for the policies the administration put in place to translate to higher wages and more jobs, but that Americans will start seeing more benefits next year.
“It will take time, but the good news is that the policies put in place, in particular the no tax on tips and overtime, will significantly raise after-tax wages next year,” Lavorgna told Yahoo Finance on Tuesday.
He also pointed out that he expects GDP to round out the year at 3% — a level many did not think was possible — and that will boost jobs and wages.
“Things are getting better, but we understand people's frustrations,” he said. “People are going to be very happy as we get into '26 and beyond, and a lot of these numbers will also improve.”
Consumers' downbeat outlook has turned up in other surveys.
University of Michigan's final consumer sentiment data released last week similarly showed Americans were feeling more negative about the economy in December compared to a year ago, even though their views had improved slightly on a monthly basis. The majority of consumers saw unemployment rising in the year ahead, for example.
As of the federal government’s most recent data releases, the country’s jobless rate is at its highest level in four years, while the annual inflation rate, at 2.7%, may be showing some signs that price growth is cooling.
By Emma Ockerman
