WASHINGTON (AP) — Consumers' confidence in the economy was shaken in December as Americans grew anxious about high prices and the impact of President Donald Trump’s sweeping tariffs.
The Conference Board said Tuesday that its consumer confidence index fell 3.8 points to 89.1 in December, the fifth straight monthly decline and approaching the 85.7 reading from April, when Trump rolled out his import taxes on U.S. trading partners. November’s reading was upwardly revised to 92.9.
A measure of Americans’ short-term expectations for their income, business conditions and the job market remained stable at 70.7, but still well below 80, the marker that can signal a recession ahead. It was the 11th consecutive month that reading has come in under 80.
Consumers’ assessments of their current economic situation tumbled 9.5 points to 116.8.
Write-in responses to the survey showed that prices and inflation remained consumers’ biggest concern, along with tariffs, despite repeated claims by President Trump that inflation is a hoax.
Perceptions of the job market also declined this month.
The conference board’s survey reported that 26.7% of consumers said jobs were “plentiful,” down from 28.2% in November. Also, 20.8% of consumers said jobs were “hard to get,” up from 20.1% last month.
Last week, the government reported that the U.S. economy gained a healthy 64,000 jobs in November but lost 105,000 in October. Notably, the unemployment rate rose to 4.6% last month, the highest since 2021.
The country’s labor market has been stuck in a “low hire, low fire” state, economists say, as businesses stand pat due to uncertainty over Trump’s tariffs and the lingering effects of elevated interest rates. Since March, job creation has fallen to an average 35,000 a month, compared to 71,000 in the year ended in March. Fed Chair Jerome Powell said recently that he suspects those numbers will be revised even lower.
Despite the broad pessimism, the proportion of those surveyed who think a recession in the next year is is unlikely grew.
The December survey showed that respondents’ views of their family’s current financial situation sank into negative territory for the first time in close to four years. On the flip side, expectations about their future financial situation were the most positive since January.
Also Tuesday, the government reported that the economy expanded at a 4.3% annual rate in the third quarter, though economists expect a much more sluggish fourth quarter due to the government shutdown and a potential pullback in consumer spending.
FILE - Shoppers wait in line to enter Macy's flagship store on Nov. 28, 2025 in New York. (AP Photo/Angelina Katsanis, File)
WASHINGTON (AP) — The U.S. economy grew at a surprisingly strong 4.3% annual rate in the third quarter, the most rapid expansion in two years, driven by consumers who continue to spend in the face of ongoing inflation.
U.S. gross domestic product from July through September — the economy’s total output of goods and services — rose from its 3.8% growth rate in the April-June quarter, the Commerce Department said Tuesday in a report delayed by the government shutdown. Economists surveyed by the data firm FactSet forecast growth of just 3% in the period.
As has been the case for most of this year, the consumer is providing the fuel that is powering the U.S. economy. Consumer spending, which accounts for about 70% of U.S. economic activity, rose to a 3.5% annual pace last quarter. That's up from 2.5% in the April-June period.
A number of economists, however, believe the growth spurt may be short-lived with the extended government shutdown dragging on the economy in the fourth quarter, as well as a growing number of Americans fatigued by stubbornly high inflation.
A survey published by the Conference Board Tuesday showed that consumer confidence slumped close to levels not seen since the U.S. rolled out broad tariffs on its trading partners in April.
“The jump in consumer spending reminds me a lot of last year’s (fourth quarter),” said Stephen Stanley, chief U.S. economist at Santander. “Consumers were stretching. So, as was the case entering this year, households probably need to take a breather soon.”
However, at least in recent years, consumer spending has held up even when data suggests they’ve grown more anxious about money.
Tuesday's GDP report also showed that inflation remains higher than the Federal Reserve would like. The Fed’s favored inflation gauge — called the personal consumption expenditures index, or PCE — climbed to a 2.8% annual pace last quarter, up from 2.1% in the second quarter.
Excluding volatile food and energy prices, so-called core PCE inflation was 2.9%, up from 2.6% in the April-June quarter.
Economists say that persistent and potentially worsening inflation could make a January interest rate cut from the Fed less likely, even as central bank official remain concerned about a slowing labor market.
“If the economy keeps producing at this level, then there isn’t as much need to worry about a slowing economy,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management, adding that inflation could return as the greatest threat to the economy.
Another consistent driver in the U.S. economy, spending on artificial intelligence, was also evident in the latest data.
Investment in intellectual property, the category that covers AI, grew 5.4% in the third quarter, following an even bigger jump of 15% in the second quarter. That figure was 6.5% in the first quarter.
Consumption and investment by the government grew by 2.2% in the quarter after contracting 0.1% in the second quarter. The third quarter figure was boosted by increased expenditures at the state and local levels and federal government defense spending.
Private business investment fell 0.3%, led by declines in investment in housing and in nonresidential buildings such as offices and warehouses. However, that decline was much less than the 13.8% slide in the second quarter.
Within the GDP data, a category that measures the economy’s underlying strength grew at a 3% annual rate from July through September, up slightly from 2.9% in the second quarter. This category includes consumer spending and private investment, but excludes volatile items like exports, inventories and government spending.
Exports grew at an 8.8% rate, while imports, which subtract from GDP, fell another 4.7%.
Tuesday’s report is the first of three estimates the government will make of GDP growth for the third quarter of the year.
Outside of the first quarter, when the economy shrank for the first time in three years as companies rushed to import goods ahead of President Donald Trump’s tariff rollout, the U.S. economy has continued to expand at a healthy rate. That’s despite much higher borrowing rates the Fed imposed in 2022 and 2023 in its drive to curb the inflation that surged as the United States bounced back with unexpected strength from the brief but devastating COVID-19 recession of 2020.
Though inflation remains above the Fed’s 2% target, the central bank cut its benchmark lending rate three times in a row to close out 2025, mostly out of concern for a job market that has steadily lost momentum since spring.
Last week, the government reported that the U.S. economy gained a healthy 64,000 jobs in November but lost 105,000 in October. Notably, the unemployment rate rose to 4.6% last month, the highest since 2021.
The country’s labor market has been stuck in a “low hire, low fire” state, economists say, as businesses stand pat due to uncertainty over Trump’s tariffs and the lingering effects of elevated interest rates. Since March, job creation has fallen to an average 35,000 a month, compared to 71,000 in the year ended in March. Fed Chair Jerome Powell has said that he suspects those numbers will be revised even lower.
FILE - A person carries a shopping bag in Philadelphia, Wednesday, Dec. 10, 2025. (AP Photo/Matt Rourke, File)
A television on the floor at the New York Stock Exchange in New York, display a news conference with Fed chairman Jerome Powell, Wednesday, Dec. 10, 2025. (AP Photo/Seth Wenig)
FILE - People shop at the Christmas Village in Philadelphia, in Philadelphia, Wednesday, Dec. 10, 2025. (AP Photo/Matt Rourke, File)
Roofers work atop a house in Anna, Texas, Thursday, Dec. 18, 2025. (AP Photo/LM Otero)
