US CB consumer confidence showed a modest improvement in February, surprising markets and pointing to resilient household sentiment despite persistent economic headwinds. The latest Conference Board Consumer Confidence Index, widely followed by investors and economists, came in stronger than expected a signal that consumer spending may continue to support economic activity in the near term.
According to the Conference Board’s report released today, the Consumer Confidence Index rose to 91.2 in February from a revised 89.0 in January, beating market forecasts and easing concerns that sentiment could deteriorate further. The improvement reflects a small but meaningful uptick in how Americans view economic prospects, marking the first month of growth in confidence after recent weakness.
While the index remains below the 100 mark typically associated with stronger optimism, and far below last year’s reading of 100.1, the uptick suggests a pause in sentiment’s decline. The component that gauge’s consumers’ outlook for the next six months climbed to 72, indicating somewhat more positive expectations around income, business conditions and the job market. However, this measure still sits below the 80 level that historically flags recessionary risk when breached.
Consumer Mood Reflects Ongoing Caution Despite Improvement
The improvement in confidence was driven in part by consumers feeling less pessimistic about the labor market. Americans reported a slightly better view of employment prospects, consistent with recent data showing sustained job gains and historically low unemployment, even though hiring remained subdued relative to prior years.
Despite the modest increase, consumers’ assessments of current conditions dipped slightly, with the present situation index falling as households remained cautious about immediate economic pressures. Mentions of inflation and prices, particularly around essentials, stayed elevated, signaling that high costs continue to temper confidence.
Economists point out that confidence levels often mirror broader economic uncertainty, and continued discussions around tariffs, interest rates and geopolitical risk have shaped sentiment trends in recent months. While confidence remains subdued compared with longer-term averages, the February gain suggests that consumers may be finding reasons for cautious optimism as economic data stabilizes.
Market Implications: Stocks, Dollar and Spending
Financial markets reacted positively to the higher-than-expected confidence reading. US equities exhibited modest gains, particularly in consumer discretionary and retail sectors that benefit directly from stronger household sentiment. Stocks often rally when consumer confidence improves because consumer spending accounts for roughly two-thirds of US GDP. As households feel more secure about their economic outlook, they are more likely to spend on goods and services, a trend that boosts company revenues and stock valuations.
In bond markets, yields on shorter-term Treasuries rose slightly following the release, as traders reassessed expectations for Federal Reserve policy. Higher confidence can be interpreted as reducing the urgency for near-term rate cuts, particularly if inflation pressures persist. Meanwhile, the US dollar found some support as positive sentiment eased concerns about weakening economic momentum.
Consumer Spending, Inflation and Economic Outlook
Consumer confidence is often viewed by policymakers and economists as a leading indicator of future economic activity, especially consumption. A rebound in confidence can presage increased spending on big-ticket items like automobiles, electronics and home furnishings, purchases that can drive broader economic growth.
However, it’s important to note that confidence remains well below levels seen in early 2025 and far from peaks in 2023. Elevated inflation expectations, persistent high prices, and uncertainty around trade policy continue to act as headwinds for sentiment, particularly among lower-income households.
Data from other sentiment surveys also showed mixed results. For example, the University of Michigan’s consumer sentiment index, another widely observed gauge, indicated only marginal changes in mood among Americans in early February, underscoring that sentiment remains uneven across different survey measures.
Expert Views
Dana Peterson, Chief Economist at the Conference Board, noted that “confidence ticked up in February after falling in January, as consumers’ pessimistic expectations for the future eased somewhat.” This suggests that while economic concerns remain, consumers are not feeling as discouraged as they did earlier in the year.
Meanwhile, Federal Reserve officials are likely to pay close attention to confidence data as they weigh future interest rate decisions. Higher confidence could influence the Fed’s assessment of economic resilience and inflationary pressures, factors that guide monetary policy deliberations.
Bottom Line
The Conference Board’s February confidence report delivered a welcome surprise for markets, suggesting US consumers are slightly more upbeat about the economic outlook than they were last month. While confidence remains below historical norms, the improvement provides a modestly positive signal for consumer spending and growth prospects. Investors and policymakers will continue to monitor how sentiment evolves in the coming months as inflation trends, labor market data and policy decisions shape broader economic expectations.
