Two the Point — Confidence Drops, Markets Hold: A Soft Landing or Just Soft Talk?

Consumer confidence has weakened, housing remains sluggish, and policy uncertainty is rising. However, corporate earnings and broader economic fundamentals remain resilient, reinforcing the case for a soft landing rather than a sharp downturn.

Key Insights:

• Consumer confidence fell to 98.3 in February (vs. 103.0 expected, 105.3 prior), marking the sharpest decline since August 2021 and the third consecutive monthly drop. The Expectations Index dipped to 72.9, below the recession-warning threshold of 80 for the first time since June 2024.
• Labor market conditions softened, with 33.4% of consumers reporting jobs as “plentiful” (down from 33.9%), while 16.3% described jobs as “hard to get” (up from 14.5%).
• Inflation expectations surged to 6.0% (from 5.2% in January), driven by concerns over tariffs and price pressures in household staples.
• Existing home sales fell to an annualized pace of 4.08M in January, well below the 5.25M pre-COVID average, as mortgage rates climbed back above 7%. Higher-end home sales remain steady, while affordability issues continue to weigh on the lower-price segment.
• Q4 earnings season remains strong, with 85% of S&P 500 companies reporting an average 15.7% EPS growth and 4.9% revenue growth. 2025 full-year EPS forecasts remain steady at $270/share (+10.5% YoY).
• Policy uncertainty is rising, with analysts estimating that DOGE government cuts could impact over one million jobs, and new tariff measures raising concerns over economic growth and manufacturing payrolls.