FirstFT: US consumer confidence sinks

Good morning and welcome back. In today’s newsletter:

• US consumer confidence plunges but investors bet on “hot” economy

• Musk wants SpaceX IPO date to coincide with planetary alignment

• Pressure on Trump administration grows over immigration

• And can smart pills make us healthier?

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US consumer confidence collapsed to its weakest level in more than a decade last month, outstripping its pandemic lows and fuelling concerns about the health of the world’s biggest economy.

Here’s what we know: The Conference Board’s consumer confidence index fell to 84.5 in January from an upwardly revised 94.2 in December. The 9.7-point drop in the Conference Board’s headline index was its biggest fall in more than four years and well below market expectations. It was the weakest number since May 2014.

The “present situation” sub-index slipped to 113.7 in January from 123.6 the previous month, its lowest since February 2021. The “expectations” sub-index, meanwhile, fell from 74.6 to 65.1, the lowest since April 2025, when Trump unveiled his “liberation day” tariff plan.

Why it matters: The bleak consumer mood in the US despite recent bumper GDP growth and strong spending data will stoke concerns that the spoils of America’s economic gains are not being evenly distributed.

Analysts said the contrast between the strong GDP data and the gloomy consumer sentiment suggested an increasingly bifurcated economy in which a rich minority of Americans benefit from a soaring stock market while the poorer majority struggle with higher prices.

“This divergence likely reflects the narrative that the top 20 per cent of households by income are driving the growth story while the bottom 60 per cent by income are treading water,” said James Knightley, chief international economist at ING.

Thomas Simons, chief US economist at investment bank Jefferies, said the disparity between wealthier households and lower-income ones was “a consequence of the K-shaped economy”. Read the full story.

• Investors bet on “hot” US economy: There is a growing belief among fund managers that Donald Trump’s tax cuts, deregulation push and campaign for lower interest rates will add more fuel to the economy this year ahead of November’s congressional polls.

Here’s what else we’re keeping tabs on today:

• Interest rates: The Federal Reserve is expected to hold interest rates steady at 3.5 to 3.75 per cent and is likely to present a more upbeat view of the US economy. However, the economic and policy outlook is likely to be overshadowed by questions about Fed independence and chair Jay Powell’s succession. The Bank of Canada and Brazil’s central bank also announce interest rate decisions.

• Results: Microsoft reports second-quarter results while tech peer Meta releases fourth-quarter earnings. Tesla, Starbucks and Levi Strauss also report fourth-quarter earnings.

• Congress: US secretary of state Marco Rubio testifies to the Senate foreign relations committee on the situation in Venezuela.

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Five more top stories

1. Elon Musk has proposed timing SpaceX’s initial public offering to coincide with a rare planetary alignment and his birthday. The rocket maker is targeting mid-June for its IPO, a time when Jupiter and Venus will appear very close together — in what is known as a conjunction — for the first time in more than three years, said five people familiar with the matter. Read the exclusive story.

• OpenAI: SoftBank Group is close to agreeing an additional $30bn investment in OpenAI as Japanese billionaire Masayoshi Son raises his bet on Sam Altman’s tech group.

• Anthropic: The high-profile AI start-up is set to raise about $20bn from venture capitalists and other investors in a fundraising deal that would value the company at $350bn, said people familiar with the matter.

2. The Swiss franc has surged to its strongest level against the US dollar in more than a decade. The Alpine currency is already up more than 3 per cent this year to more than SFr0.77 against the dollar, after a 14 per cent gain last year, as political risks drive investors to look for alternatives to the US currency.

• More market news: Gold raced to another record high earlier today, extending the precious metal’s gains this year to 22 per cent.

• The dollar: The US currency accelerated its declines yesterday after Donald Trump said he was not concerned by its steep falls in recent days.

3. Citigroup sued a former executive yesterday, a day after she filed a lawsuit against her former employer alleging sexual harassment. The Wall Street bank asked a federal court in Texas, where Julia Carreon lives, to rule that the dispute should be handled through private dispute resolution.

4. UPS said it will slash up to 30,000 jobs this year and close at least 24 facilities, as the logistics group reckons with a decrease in package volume from Amazon, its largest customer. The job cuts, representing about 6 per cent of UPS’s global workforce, will target workers responsible for handling and delivering packages.

5. Boeing yesterday reported its highest quarterly revenues since 2018, strong cash flow growth and a jump in orders as the US aerospace giant’s turnaround gained momentum under chief executive Kelly Ortberg. The Virginia-based company cheered investors with its second consecutive quarter of positive free cash flow.

Today’s big read

The pressure on Donald Trump to back away from his most hardline stances on immigration has reached a tipping point following the killing of 37-year-old nurse Alex Pretti. Republicans in Congress have struggled to defend the administration’s rhetoric and the White House has even found itself at odds with champions of gun rights on the conservative right.

We’re also reading . . . 

• The future of Nato: After the stand-off over Greenland, European leaders are having to consider what would happen if Washington leaves the military alliance.

• Middle powers: Europe has a key role to play in building a successor to the US-led global order, writes Martin Wolf.

• Private equity: The firm that pioneered private equity for the people is suffering net redemptions at its flagship US fund for the first time. Here’s why.

• Hugging Face: The company last year turned down a $500mn Nvidia investment, underlining its position as an influential arbiter in the global AI industry.

Chart of the day

US health insurance stocks plunged yesterday after the Trump administration said it would throttle spending on a popular government-funded scheme for older Americans. UnitedHealth and Humana, the largest providers of government-subsidised insurance plans known as Medicare Advantage schemes, shed around a fifth of their market value.

Take a break from the news . . . 

Getting patients to keep taking their meds is a big deal. Now scientists at the Massachusetts Institute of Technology claim to be one gulp closer to tackling the problem, writes Anjana Ahuja, by developing a digital, “bioresorbable” pill. Can smart pills make us healthier?