Excuse the negativity you are about to read – it is not my doing, but likely your members’. The upbeat post-election mood of 2024 is losing its spark. The Conference Board’s February survey on consumer confidence fell for the third month in a row and by the largest amount in three-and-a-half years, measures of current and future financial conditions worsened across all age groups and incomes. History shows that post-election swings in consumer attitudes tend to be short lived, with consumers initially focusing on jobs and incomes.

The mood-shift this time comes from an abundance of uncertainty regarding where U.S. politics, the economy and the unknown impact of tariffs will end up. Concerns about inflation, the current administration and its policies ranked high in the responses to the survey. The share of consumers that said jobs were plentiful fell, while the share saying jobs were hard to get rose for the first time in five months.

Rising borrowing costs are also weighing on consumers’ appetites for buying big-ticket items like cars and certain appliances. Even planning for vacations in the next six months has taken a back seat, falling to the lowest level in almost four years. In a related study from Wells Fargo, about a third of respondents said they were putting off buying a home while one in six have postponed education plans – and one in eight have pushed back retirement.

KEY INDICATORS THIS WEEK

Inflation, Spending – As if confirming what we already knew about consumer behavior in January, all spending fell 0.2% after rising 0.8% in December. January was plagued with harsh weather, fires and paying off holiday credit card bills, so the dip should not be a surprise. At the same time, incomes rose more than expected, up 0.9%. The savings rate, therefore, surged from 3.5% to 4.6%. Whether January’s spending activity is the beginning of a trend or just a one-month pause remains to be seen.

Housing – January was not a rosy month for the housing market. All categories of housing fell as mortgage rates remained near 7% and most of the country was hit by fires or severe weather. Sales of new and existing homes fell after several months of what appeared to be a return of solid housing activity. Inventory increased providing buyers with much needed choices, but so did prices and mortgage rates. The average 30-year mortgage rate topped 7% in January. Housing starts fell 9.8% and January was the ninth month out of twelve with negative sales. Activity was low for both single-family and multi-family starts. Homebuilders are concerned that proposed tariffs on goods from Canada, Mexico and China could add 7%, or $29,000, to the cost of a $400,000 home. More than 70% of U.S. softwood lumber and gypsum imports come from Canada and Mexico.