A Generational Divide in Economic Sentiment
Gen Z consumer confidence is rising even as broader anxiety about inflation and trade continues to weigh on older Americans. The latest Consumer Confidence Index from the Conference Board shows a modest overall improvement in sentiment for February, but the headline numbers mask a growing generational split.
The index increased by 2.2 points to 91.2, up from a revised 89 in January, based on 1985 levels set at 100. While the overall reading remains below long-term historical averages, younger consumers are emerging as the most optimistic demographic in the survey.
On a six-month moving average basis, confidence improved among consumers under 35, which includes much of Generation Z and younger millennials. Since mid-2023, this group has consistently ranked as the most confident cohort tracked by the Conference Board.
Short-Term Optimism Outpaces Present Reality
The February data reveal a nuanced picture. The Present Situation Index, which measures views on current business and labor market conditions, declined by 1.8 points and has been trending downward since mid-2021. In contrast, the Expectations Index, which gauges sentiment about income, business conditions, and jobs over the next six months, rose by 4.8 points to 72.
That divergence suggests consumers feel more hopeful about the near future than they do about the current environment.
Dana M. Peterson, chief economist at the Conference Board, noted that written responses from participants still leaned negative. Inflation and the cost of goods remained top concerns. Mentions of trade and politics increased in February, while references to the labor market eased slightly. Observations about immigration rose modestly.
The six-month average confidence reading declined among baby boomers, Generation X, and members of the Silent Generation. For these groups, inflation pressures and geopolitical uncertainty appear to overshadow expectations for improvement.
Youthful Optimism Meets a Challenging Job Market
The strength in Gen Z consumer confidence stands in contrast to recent labor data. According to ADP, private payrolls increased by only 22,000 jobs in January, a slowdown compared with prior years. In 2025, private employers added 398,000 jobs, down from 771,000 in 2024.
For younger workers entering the labor force, conditions are more competitive than they were during the post-pandemic hiring surge. Employers have pulled back on aggressive recruitment, and flexible arrangements once widely offered have become more selective.
Still, there are tentative signs of stabilization. Data from the Bureau of Labor Statistics show that unemployment among 16 to 19-year-olds declined from 16.3 percent in November 2025 and 15.7 percent in December to 13.6 percent in January 2026. For those aged 20 to 24, the unemployment rate fell from above 8 percent late last year to 7.1 percent in January.
These incremental improvements may be reinforcing younger consumers’ belief that the labor market is gradually finding its footing.
Spending Plans Signal Cautious Resilience
Despite persistent macroeconomic concerns, consumers are showing greater willingness to spend on discretionary categories. In February, more respondents indicated plans to allocate funds toward dining out, hotel stays, and personal travel over the next six months.
Expectations for spending on utilities, pet care, and motor vehicle servicing also increased. While overall confidence remains restrained, this shift suggests households may be adjusting to higher price levels rather than retreating entirely.
Another notable shift involves recession perceptions. Fewer consumers now say a recession in the next 12 months is very likely, and a growing share consider it unlikely. The percentage of respondents who believe the U.S. economy is already in recession also declined, though the Conference Board did not provide detailed figures.
The generational gap remains the defining feature of the February survey. Older Americans appear focused on inflation dynamics, trade policy uncertainty, and political risk. Younger respondents, by contrast, are expressing guarded optimism about income prospects and economic momentum.
For policymakers and business leaders, this divergence may carry implications for consumer behavior in 2026. If younger households continue to feel relatively secure, sectors tied to travel, hospitality, and services could benefit. At the same time, sustained caution among older consumers may temper broader retail and investment activity.
As spring approaches, the data suggest that while overall sentiment remains mixed, Gen Z consumer confidence is providing a modest counterweight to wider economic unease.
