The Warning Light

The Conference Board Consumer Expectations Index registered 74.4 in May 2026 — well below the 80-point threshold that has preceded every U.S. recession since 1967. The index has been below this threshold continuously since early 2025. The April 2025 reading of 54.4 was especially depressed within the recent run; while the index has bounced modestly since, it has not come close to clearing the signal line.

What distinguishes this indicator from pure sentiment surveys is its recession-signal history. The Conference Board expectations index specifically asks consumers about their outlook for income, business conditions, and employment over the next six months. When expectations fall below 80 and stay there, it has historically preceded GDP contraction by 6–12 months.

The Mood Ring — Michigan's sentiment survey — corroborates the pattern: consumer sentiment remains at levels typically associated with recessionary periods. The question is whether this time is different. Some analysts argue that the signal is distorted by political polarization, which has increasingly colored consumer survey responses. But The Tightening — the Chicago Fed's leverage conditions index — shows financial conditions tightening quickly, suggesting the pessimism is grounded in financial reality. The Buffer at historically low levels confirms that consumers have less cushion to absorb any downturn these expectations may be anticipating.