Economy Report: What Consumers Say

With consumers seeing few developments in the U.S. economy that encourage them, it’s not surprising that the University of Michigan’s February confidence survey found that people who have significant stock holdings were among the most optimistic Americans.

The financial markets started the year strongly, with all three major stock indexes showing gains in January. The stock market was more volatile in February, but it was broadly resilient. Even heavy stockholders’ improved outlook barely lifted the university’s Consumer Sentiment Index, which ended February just above flat, rising 0.2 points, to 56.6, from the previous month.

“Sentiment is about 13% below a year ago and 21% below January 2025,” Joanne Hsu, director of the university’s Surveys of Consumers, stated in a press release. “That said, views vary considerably across the population. A sizable month-to-month increase in sentiment for the largest stockholders was fully offset by a decline among consumers without stock holdings.

“Similar divergences were seen across income and education, where higher-income or college-educated consumers exhibited increases in sentiment while lower-income or less-educated counterparts did not,” Hsu added. “With their much stronger income prospects and investment portfolios, wealthier and higher-income consumers feel better-insulated from any possible risks to the economy.”

Hsu said the university’s survey showed that “overall, consumers do not perceive any material differences in the economy from [January]. About 46% of consumers spontaneously mentioned high prices eroding their personal finances; readings have exceeded 40% for seven months in a row.”

The university’s survey focuses on people’s perceptions of their own financial situation and the cost of living. The other major barometer of the public mood, The Conference Board’s Consumer Confidence Index, homes in on consumers’ perceptions of the job market. There, too, little improvement occurred in February. The Conference Board said its index edged up 2.2 points, to 91.2, but remained well below the heights it reached in late 2024.

“Confidence ticked up in February after falling in January, as consumers’ pessimistic expectations for the future eased somewhat,” Dana M. Peterson, The Conference Board’s chief economist, stated in a press release. “Four of five components of the index firmed. Nonetheless, the measure remained well below the four-year peak achieved in November 2024 (112.8).”

The think tank said its Present Situation Index continued to decline because views of current business conditions worsened, although perceptions of employment conditions improved a bit. The Expectations Index, based on what consumers think about the outlook for income, business and job market conditions, showed meaningful improvement.

Using age 35 as a dividing point, people younger than that were more confident than older people. By income, however, confidence on a six-month moving average basis “continued to decline for most brackets.” Politically speaking, Republicans and independents were more optimistic in February, Democrats less so.

“Consumers’ write-in responses on factors affecting the economy continued to skew toward pessimism,” Peterson said. “Comments about prices, inflation and the cost of goods remained at the top of consumers’ minds. Mentions of trade and politics also increased in February. Labor-market mentions eased a bit in February, while observations about immigration increased somewhat.”

Important for the boating industry as it enters the spring selling season, consumers’ plans to buy big-ticket items increased in February. Purchasing plans for cars rose on a six-month moving average, although the think tank said, “consumers continued to prefer buying used cars.”

Inflation in December — the most recent month for which data was available — rose more than economists expected. The Commerce Department said the core Personal Consumption Expenditures Price Index, which strips out the volatile food and energy segments, rose 0.4% after a gain of just 0.2% the previous month. During the 12-month period that ended in December, core PCE inflation was up 3% after the 12-month figure rose 2.8% the previous month. Like the core reading, the full single-month PCE index was up 0.4% in December. The PCE index is the Federal Reserve’s preferred inflation gauge, as it determines interest-rate policy.

Separately, the Commerce Department reported that consumer spending rose a solid 0.4% in December, the same as in the previous month. Adjusted for inflation, however, the December gain was just 0.1%.

The mood at the nation’s small businesses faltered slightly in January. The National Federation of Independent Business said its Small Business Optimism Index declined 0.2 points, to 99.3, which nonetheless kept the measure above its 52-year average of 98. More worrisome was that the trade group’s Uncertainty Index rose 7 points, to 91, with member owners who were unclear about whether this is a good time to expand their business being the primary driver of the problematic reading.

“While GDP is rising, small businesses are still waiting for noticeable economic growth,” NFIB chief economist Bill Dunkelberg stated in a press release. “Despite this, more owners are reporting better business health and anticipating higher sales.”

Eighteen percent of member business owners said taxes are their most important problem, and 16% cited labor quality. Only 12% said inflation is their top issue. NFIB said the net percentage of member owners who expect the economy to improve in the coming months fell 3%, to 21%. A seasonally adjusted 31% of member business owners reported job openings that they could not fill in January, down 2% from the previous month. A net 32% of owners, also seasonally adjusted, reported raising pay in January, up 1% from December.

This story originally appeared in the April 2026 edition of Soundings Trade Only.