Consumer Confidence Hits 2-Year High As Recession Fears Fade: Stock Market Optimism Soars To Record High

American consumers are feeling better about the economy than they have in years, as the latest data Tuesday from The Conference Board shows.

The Consumer Confidence Index rose from 111.3 in October to 111.7 in November, reaching its highest level in nearly two years, aided by an improving labor market and easing concerns about a potential recession.

"The proportion of consumers anticipating a recession over the next 12 months fell further in November and was the lowest since we first asked the question in July 2022," said Dana M. Peterson, chief economist at The Conference Board.

Labor Market Drives Optimism

The surge in consumer confidence was fueled by the Present Situation Index, which reflects business and labor market conditions.

That metric jumped 4.8 points to 140.9, signaling widespread belief in the strength of the job market. Notably, 33.4% of respondents said jobs were “plentiful,” while only 15.2% said jobs were “hard to get.” Both figures improved compared to October.

Consumers are also optimistic about the future availability of jobs. In November, 21.7% expected more jobs to be available in six months, up sharply from 18.4% in October. It's the most upbeat reading on job prospects in nearly three years.

"November's increase was mainly driven by more positive consumer assessments of the present situation, particularly regarding the labor market," Peterson said.

Confidence surged among younger Americans in November, with consumers under 35 driving much of the increase. Sentiment among those aged 35-54 dipped slightly after strong gains in October.

Among income groups, households earning over $100,000 and those under $35,000 saw the most optimism, while the wealthiest consumers — earning above $125,000 — reported flat or slightly declining confidence.

Recession Risk At Record Lows

One of the most striking developments in the report is the collapse in recession fears. Recession expectations for the next 12 months have reached their lowest level since mid-2022, The Conference Board said.

With the Expectations Index rising slightly to 92.3, well above the critical threshold of 80 that often signals economic downturn, consumers are showing little concern about a looming slowdown.

“Consumers' optimism for their finances over the next six months reached a new high, even as their assessments of their family's current financial situation fell slightly,” Peterson said.

Regarding spending preferences, plans to buy homes have stalled, while auto-buying intentions ticked up slightly. Buying plans for most appliances and electronics declined. Spending on services, particularly travel and health care, remains a bright spot, with consumers prioritizing experiences over material goods.

Stock Market Confidence Reaches Record High

Wall Street appears to have won over Main Street. A staggering 56.4% of consumers now believe stock prices will rise over the next year, a record-high share for this metric.

Just 21.3% of respondents expect stocks to decline, marking a sharp contrast to the bearish sentiment seen earlier in the year.

In addition, expectations for lower interest rates have increased. Over one-third of consumers (34.6%) now believe rates will fall in the next 12 months, the highest figure since April 2020.

Inflation Expectations Ease, But Price Worries Persist

Inflation expectations continued to moderate, with consumers projecting 12-month inflation at 4.9%, down from 5.3% in October. That's the lowest reading since March 2020, reflecting growing confidence that price pressures are cooling. Write-in survey responses showed a decline in mentions of inflation, though higher prices remain a top concern for 2025.

Interestingly, when asked about their hopes and worries for the coming year, consumers overwhelmingly prioritized lower prices and improved household finances.

Paying off debt, saving more money and reducing taxes also ranked high on their wish list.

Market Reactions

Stocks delivered mixed performance during Tuesday morning’s session in New York, showing little reaction to the latest consumer confidence report.

Among the major equity indices, the tech-heavy Nasdaq 100 led gains, rising 0.5%, while the S&P 500 also advanced 0.5%. The Dow Jones Industrial Average slipped 0.6%.

Wall Street remains on edge as concerns ripple through markets following President-elect Donald Trump's pledge to impose a 25% tariff on all imports from Mexico and Canada, part of a plan to curb drug trafficking into the U.S.

Small-cap stocks lagged behind their larger peers, with the iShares Russell 2000 ETF IWM falling 1%. This pullback comes after the Russell 2000 index hit a fresh all-time high on Monday.

Consumer-oriented sectors also showed mixed performance. The Consumer Discretionary Select Sector SPDR Fund XLY rose 0.4%, while the Consumer Staples Select Sector SPDR Fund XLP edged 0.1% lower.

Read Next:

• EXCLUSIVE: Small Caps Hit Records As Expert Says Russell 2000 ‘Still Very Discounted’ Compared To S&P 500

Illustration created using AI via Midjourney.