Two key economic reports released on Tuesday suggest the U.S. economy may be losing steam as 2025 gets underway. Durable goods orders fell for the second consecutive month, and consumer confidence slipped to its lowest level since September, reinforcing concerns about the direction of growth in the months ahead.
Durable Goods Orders: New data from the Commerce Department showed durable goods orders dropped 2.2% in January, extending December’s 2.0% decline and coming in well below the 0.5% increase that economists had forecast. This marked the steepest back-to-back drop in orders since mid-2023 and signals potential softness in business investment.
- However, when stripping out volatile transportation orders, durable goods demand showed a modest rebound, rising 0.3% from December. That was an improvement from the previous month’s 0.2% decline but still slightly below expectations of a 0.4% increase.
- One relative bright spot in the report was non-defense capital goods orders, excluding aircraft, which rose 0.5% in January. While this was down from the 0.9% increase in December, it outpaced economists’ forecast of a 0.3% gain, suggesting some underlying resilience in business investment.
Consumer Confidence: The Conference Board’s Consumer Confidence Index also reflected growing economic uncertainty. The index fell to 104.1 in January, down from a revised 109.5 in December and the lowest reading since September, when it dipped below 100.
- The Present Situation Index, which tracks consumers’ views on current business and labor market conditions, tumbled 9.7 points to 134.3, a notable drop that suggests concerns about job security and economic stability are rising.
- The Expectations Index, which gauges short-term economic optimism, declined 2.6 points to 83.9, signaling weaker sentiment about future income and job prospects.
Demographically, younger consumers under 55 led the decline in confidence, while those aged 55 and older saw a slight improvement. By income level, high earners—those making over $125K—reported the sharpest drop in sentiment, whereas lower-income households posted the biggest gains.
Bottom Line: The combination of declining durable goods orders and softening consumer confidence raises questions about the economy’s momentum in early 2025. While some underlying investment indicators remain stable, the broad decline in business orders and consumer sentiment suggests that growth could slow further in the months ahead.
