The index finger is typically the most dexterous and sensitive finger on the human hand, making it central to how we interact with the world. Beyond its practical role, it also features in the widely studied 2D:4D digit ratio, which compares the length of the index finger to the ring finger. Research across large populations has identified subtle but consistent differences between men and women, with the ratio thought to reflect prenatal hormone exposure and be associated with certain physical and behavioral traits — although the effects are generally modest.A different type of index, the Conference Board Consumer Confidence Index, tracks households’ perceptions of current economic conditions and their expectations for the months ahead. When confidence is high, households are more willing to make big-ticket purchases and take on debt. When confidence falls, they tend to spend with more discretion and focus on essentials. By capturing these trends, the index provides an early signal of shifts in consumer behavior that can influence overall economic growth.Consumer Confidence CollapsesAfter an upwardly revised December reading of 94.2, the Index dropped sharply in January to 84.5 — its lowest level since 2014 — reflecting weakening confidence in both current economic conditions and expectations for the months ahead.
- The Present Situation Index fell by 9.9 points to 113.7, signaling a weaker assessment of current business conditions alongside rising unease about job availability.
- The Expectations Index dropped by 9.5 points to 65.1, well below the historical level often associated with elevated recession risk. All three of its forward-looking components declined, pointing to increased pessimism around future business conditions, labor market trends, and household income prospects.
Although inflation has eased from its peak, everyday expenses such as groceries, gas, rent, and healthcare remain high, making affordability a key concern for many households. At the same time, broader worries about the economy, the labor market, and geopolitical developments are weighing on consumer sentiment, creating uncertainty about both current finances and future prospects. Higher interest rates in recent years have also increased borrowing costs for mortgages, credit cards, and other loans, adding further pressure to household budgets.Consumers Are Being CautiousWeakening consumer confidence is translating into more cautious buying behavior, with big-ticket items taking the greatest hit. Intentions to buy new cars, homes, and household appliances such as refrigerators, dishwashers, and TVs declined, while plans for used cars, furniture, and smartphones remained relatively strong. Overall, these patterns indicate households are prioritizing more affordable or essential items and delaying purchases of higher-cost or discretionary goods.Spending on services also softened in January, with fewer consumers planning ahead and more expressing uncertainty. Despite this, certain categories remained top priorities, including restaurants, bars, take-out, streaming and internet services, healthcare, and beauty and personal care. Travel-related services, such as hotels, airfare, and vehicle maintenance, showed surprising resilience, even as broader vacation plans weakened. These trends suggest that while households are cautious overall, they continue to allocate spending toward everyday necessities and certain experiences that remain important to them.How Community Financial Institutions Can HelpIn times of uncertainty and declining confidence, community financial institutions can play a vital role for their customers. As trusted advisors, they are uniquely positioned to help clients interpret economic trends, address their financial concerns, and provide guidance that keeps them focused on their long-term goals.
- Communicate clearly about confidence and risk. Use timely, plain language outreach around real moments customers are already experiencing — rate change explainers, auto loan check-ins, HELOC or refi conversations, or first-time buyer discussions — to frame what higher (or lower) rates mean for them and how your balance sheet strategy keeps their money safe and accessible.
- Encourage financial plan and resilience reviews. Tie “financial resilience checkups” to concrete triggers your bankers are seeing — deposit runoff, rising credit card balances, customers delaying auto or home purchases — and use short, tool-supported conversations to rebalance budgets, debt payments, and savings (especially emergency funds).
- Offer solutions for increasingly cautious consumers. In the near term, emphasize liquidity, flexibility, and optionality with options like high-yield savings, emergency fund subaccounts, short-term CDs, and simple debt consolidation options. Then pivot later to longer-term commitments (e.g., retirement, term deposits) as confidence improves and customers feel more secure.
Although consumer sentiment has weakened, it remains an important signal rather than a definitive outcome. Shifts in confidence often reflect heightened uncertainty rather than changes in actual financial conditions, and sentiment can improve as inflation pressures ease, the labor market stabilizes, or expectations adjust. Financial institutions should continue to monitor these trends and remain responsive to their customers’ evolving needs.
