Consumer confidence edges up to 91.2, but recession warning light has now been on for 13 months

The Conference Board released its February 2026 Consumer Confidence Index on Feb. 24. The headline index rose to 91.2 from a revised 89.0 in January — a 2.2-point gain that beat Wall Street's consensus expectation of roughly 87.2. The Present Situation Index, which reflects how consumers feel about current business and labor conditions, fell 1.8 points to 120.0. The gap between a relatively strong Present Situation reading and a persistently weak Expectations Index is the defining feature of the current economic moment.

The Expectations Index rose 4.8 points to 72.0, but that number is still well below 80 — the level that economists have used since the 1960s as a reliable recession warning. Below 80 has preceded a recession within 12 months in all but two post-war instances. February 2026 marks the 13th consecutive month the Expectations Index has been below that threshold. The last comparable streak was in the early months of the 2008 financial crisis, which deepened into the worst recession since the Great Depression.

The labor market tells a sharper story than the confidence numbers. The economy added just 181,000 jobs in all of 2025, a fraction of the 2+ million jobs added in 2024. January 2026 came in stronger at 130,000 nonfarm jobs — but that single month can't offset a year of near-stagnant hiring. Economists describe the current labor market as 'low hire, low fire': businesses aren't laying workers off in large numbers, but they aren't hiring aggressively either, creating a frozen market that suppresses both economic mobility and wage growth.

Consumer write-in responses on the Conference Board survey — which the organization publishes separately from the index numbers — continued to skew pessimistic on prices, trade, and politics. Inflation expectations for the next 12 months remained elevated at 3.4% even as the January Consumer Price Index came in at 2.7%. The gap between expected and actual inflation suggests that Americans are budgeting more conservatively than the headline numbers justify, pulling forward behavior that acts as a drag on consumption.

The headline index of 91.2 remains 21.6 points below the four-year peak of 112.8 reached in November 2024 — just before Trump's election victory. The November 2024 peak was partly driven by post-election optimism among Republican-leaning consumers. That optimism has since evaporated as tariff uncertainty, a 43-day federal government shutdown in late 2025, and persistent cost pressures worked through the economy. The index has been below the historical average at the start of past recessions — 101.9 — continuously since February 2025.

The K-shaped economy is the structural context behind the confidence data. S&P 500 corporate earnings in 2025 came in above expectations for the fifth consecutive year. Upper-income households with diversified investment portfolios have recovered from the 2022-2023 rate shock and are benefiting from asset appreciation. Lower- and middle-income households, by contrast, carry more of their wealth in wages and home equity, have absorbed the largest share of grocery and energy price inflation, and face the steepest exposure to tariff-driven price increases on imported goods they can't avoid — electronics, clothing, household goods.

The Federal Reserve is watching the confidence data in parallel with its interest rate decisions. JPJerome Powell has maintained the Fed's current rate stance, holding the federal funds rate steady while waiting for more evidence that inflation is durably returning to 2%. Twelve-month inflation expectations cooling slightly to 3.4% from 4.0% in January suggests some easing of price pressure anxiety — but not enough to give the Fed confidence to cut rates. With Section 122 tariffs on all imports now in effect and potentially widening under new Section 301 investigations, economists at Goldman Sachs and JPMorgan have revised their 2026 GDP forecasts downward to between 1.2% and 1.8%.

The political stakes are direct. Democratic accountability research consistently shows that economic anxiety — not economic conditions per se — drives incumbent party approval ratings. Thirteen consecutive months of recession-warning pessimism, even during a period of low unemployment, creates a persistent background of economic dissatisfaction that shapes how voters evaluate both the president and Congress. Historically, a sitting president with consumer confidence below 95 in an off-year election faces significant headwinds — and the November 2026 midterms are now nine months away.