The Invisible Recession

Americans are more terrified economically than during the COVID-19 pandemic.

By Jeff Nesbit

The American consumer is currently sending a message — as loudly as it possibly can — that Washington and Wall Street can no longer afford to ignore.

According to the latest Consumer Confidence Index released this week by The Conference Board, economic sentiment hasn’t just slipped. It’s collapsed.

The headline number is a 9.7-point plunge to 84.5, the lowest level in 12 years. But the real flashing red light is hidden in the comparison with recent history: Americans are now more pessimistic about their economic future than they were during the darkest depths of the COVID-19 pandemic.

Photo by Igor Omilaev on Unsplash

Think back to 2020, when the world was shuttered, supply chains were broken, and unemployment peaked at a staggering 14.7%. Today, with an unemployment rate sitting at roughly 4.4%, the public is somehow more anxious.

This is a crisis of confidence that defies traditional economic policy numbers touted by Wall Street analysts and Trump economic advisors on Fox News or CNBC. Though GDP numbers may show modest growth, the lived experience of the American household is now clearly one of mounting dread.

For years, the one pillar holding up the American psyche was a robust labor market. That pillar is crumbling. The share of consumers who view jobs as “plentiful” plummeted from 27.5% to 23.9% in a single month. Perhaps more alarming is the forward-looking sentiment: only 13.9% of Americans expect more jobs to be available in six months.

What’s driving this? Basically, we’re seeing a perfect storm of anxiety.

First, there’s the persistent, corrosive effect of inflation. Though the rate of inflation has slowed from its peak, price levels have stubbornly refused to come down.

Dana Peterson, the Conference Board’s chief economist, said that write-in responses from the survey are dominated by concerns over food, groceries, and gas.

For the average family, a “stable” inflation rate doesn’t matter if the weekly grocery bill still feels like a ransom payment.

Second, we’re seeing the emergence of AI anxiety — a fear that will only grow, not lessen, over time.

News reports consistently identify a growing wariness of looming AI-driven job losses. Unlike previous downturns, this pessimism isn’t just hitting blue-collar manufacturing; it’s creeping into the professional class, where the fear of being automated out is starting to manifest in consumer spending habits.

The most technical yet terrifying part of The Conference Board report is the Expectations Index. It fell to 65.1. In the world of economic forecasting, any reading below 80 on this index is considered a reliable signal of a recession on the horizon. We aren’t just flirting with that threshold; we’re buried deep beneath it.

The data suggest Americans are bracing for some sort of huge economic impact. Plans to purchase big-ticket items (things like homes, cars, or major appliances) are all in retreat. When American consumers, who account for roughly 70% of the U.S. economy, decide to stop buying, a self-fulfilling prophecy begins.

We’re seeing a shift toward spending on small indulgences like take-out and streaming while avoiding the foundational investments that drive long-term economic growth.

The report also highlights a new variable in the American fear equation: trade instability. Mentions of tariffs, trade wars, and global politics rose significantly in January. Consumers are no longer insulated from the complexities of international policy; they understand intuitively that a trade war means higher prices at big-box retailers.

This uncertainty about spending on big-ticket items — combined with looming threats of war and geopolitical conflicts now edging into the public’s consciousness — has created a state of permanent wait-and-see by the average consumer that’s toxic to economic expansion.

Interestingly, the malaise is universal across all demographics. Gen Z remains the most optimistic generation — most likely because of their distance from the 2008 financial crisis — but even their confidence is trending downward.

The sharpest decline, however, occurred among independent voters, the report showed. This suggests that the downbeat economic vibe has transcended partisan talking points. You can’t really message your way out of a 12-year low in consumer confidence.

For years now, policymakers and pundits have pointed to “low” unemployment and “steady” GDP as proof that the U.S. economy is healthy. The Conference Board report is one more piece of evidence that those metrics are probably outdated.

We’re living through an invisible recession — a period in which the numbers on the spreadsheet look fine, but the spirit of the consumer is broken. The gap between the consumer report’s Present Situation Index and the Expectations Index tells a story of a nation that feels like it’s standing on a trapdoor.

The red light is bright and blinking. Consumers are telling us they are out of breath, out of patience, and out of confidence. It’s time we start believing them.

Jeff Nesbit was the public affairs chief for five Cabinet departments or agencies under four presidents.

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