US consumer sentiment fell sharply in January, highlighting growing financial pressures for middle- and lower-income households, according to ING's latest economic analysis. The Conference Board's consumer confidence index dropped to 84.5, down from an upwardly revised 94.2 in December and well below the 91.0 consensus forecast, marking the lowest reading since 2014.
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The decline reflects a divergence in economic experience, with spending growth driven primarily by high-income households while the majority of Americans feel increasingly constrained. ING notes that "spending is being driven by a relatively small cohort of high-income households while middle and lower-income households are feeling more financial pressure and are more nervous about what the future holds."
The analysis highlights a K-shaped recovery, in which the top 20% of households control 70% of total wealth and continue to spend on services, while the bottom 60%, holding only 15% of wealth, face job insecurity, tariff impacts, and limited gains from property and stock market growth.
Confidence in the labour market is also weak. Only 23.9% of respondents believe jobs are plentiful, compared with 20.8% who consider jobs hard to get, producing a net reading of 3.1%, the lowest outside pandemic-era levels since 2016. ING suggests that this perception may foreshadow rising unemployment.
Given this backdrop, ING expects the Federal Reserve to maintain a cautious approach to monetary policy, moving gradually toward a neutral stance, with at least two further rate cuts likely later in 2026.
The report underscores the ongoing economic bifurcation in the US, where headline spending growth masks deeper household-level pressures.
More information:
ING
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