The Confidence Gap

Despite signs of economic stability, Americans are becoming more uneasy about the economy, as reflected in the drop in consumer confidence over the last few months. According to the Conference Board, consumer confidence rose slightly in February 2026, increasing 2.2 points to 91.2 after a drop in January, suggesting a brief improvement in public sentiment. However, that uptick does not tell the full story. In January, the Consumer Confidence Index (CCI) fell to 84.5, its lowest level in over a decade. That figure is lower than the CCI during the COVID-19 pandemic, with the index at 86.9 in April 2020. Even with February’s rebound, confidence remains well below pre-pandemic levels. For example, the CCI in February 2020, right before COVID-19 was declared a nationwide emergency in the U.S., was 130.7, indicating that sentiment remains far weaker than in previous years. Even with short-term improvement, these numbers suggest Americans have not fully regained optimism about the economy.

The Consumer Confidence Index is based on surveys that ask Americans how they feel about the economy currently and what they expect in the coming months. Expectations play a big role in the index, so economists treat it as a forward-looking indicator. This means that it measures not only how people think the economy is doing currently but also how it will do in the future. The Index is split up into two components: the Present Situation Index, which measures how consumers feel about current business and labor conditions, and the Expectations Index, which measures consumers’ outlook for the next six months. Economists especially pay close attention to the Expectations Index because sharp declines in it can signal a potential slowdown before it appears in other economic data. In this way, Consumer Confidence can act as an early warning sign for bigger economic shifts.

That distinction helps explain why confidence can fall even when traditional economic indicators appear stable. Data from the US Bureau of Labor Statistics shows that unemployment remains relatively close to historical standards. Even though job growth has slowed, the unemployment rate has not gone up to levels that would indicate a recession. Despite this, Americans do not feel confident about future job prospects. This disconnect between economic indicators and a negative public view is highlighted in a report by CBS News, which found that many economists graded the US economy in the “B” range, with the justification that economic growth sped up to its fastest pace in two years, inflation rose less than expected, and the stock market hit record highs. In contrast, 75 percent of consumers rated the economy a “C”, “D”, or “F”.

A main driver for the recent decline is rising everyday costs. The price of oil has risen, in part due to the war with Iran, causing a $1 increase in the price of gas per gallon over the last month. Since the war disrupted energy markets, prices have become more volatile, causing consumers to perceive the economy as less stable. Besides gas prices, other essentials like groceries and housing have also increased. Financial markets are also showing negative signs, with stock indexes such as the Dow Jones Industrial Average and the Nasdaq Composite entering correction territory after falling by more than 10%, which is not uncommon, but can make people feel as though the economy is unstable.

This moment shows a gap between perception and reality regarding the economy. Some economic indicators, including inflation and unemployment, have not shown dramatic drops. Still, confidence is low because people are responding to uncertainty about global events and prices rather than current conditions. The CCI reflects the psychological component of the economy, showing how people react to the information they see.

What happens next will depend on whether those tensions ease or intensify. If prices stabilize and global tensions improve, confidence could recover. However, if the current uncertainty about the government persists, the decline in confidence could translate to slower economic growth. Ultimately, consumer confidence matters because it shows the intersection of economics and human behavior, reflecting not just how the economy is doing but how Americans feel about it. At a time when those expectations remain uncertain, the CCI shows that the economy is shaped not only by data, but also by perception.