📉😰 US Consumer Confidence Plummeted in Feb
Happy Wednesday all,
This week, we’re tracking a sharp decline in US consumer confidence, a relentless surge in egg prices, and Microsoft’s unexpected pullback on AI data center leases. As economic uncertainty tightens its grip, Americans are cutting back on spending, while investors are watching how Big Tech recalibrates its AI ambitions. Meanwhile, Lucid shakes up leadership, Wall Street’s risk-takers take a hit, and home prices continue to climb.
Let’s dive into the biggest stories shaping the market.
Enjoy this week’s Hump Days!
- Humphrey & Rickie
👀 Eye-Catching Headlines
Lucid CEO steps down; EV maker plans to more than double production in 2025 (CNBC)
The average IRS tax refund is more than 32% lower this season, early filing data shows. Here’s why (CNBC)
Economic Uncertainty Has Americans Cutting Spending, Study Says (BBG)
Private-Equity Firm Roark Nears $1 Billion Deal for Dave’s Hot Chicken (WSJ)
US Home-Price Gains Quickened in December as Buyers Returned (BBG)
Tech Giants Have Pledged Over $1 Trillion in US Investment, So Far (BBG)
Wall Street Gamblers Get Crushed as Leveraged ETF Losses Hit 40% (BBG)
The Weekly Brief
US Consumer Confidence Drops by Most Since 2021 on Outlook
Consumer confidence in the United States plummeted in February 2025, marking the largest monthly decline since August 2021. The Conference Board's Consumer Confidence Index dropped 7 points to 98.3, falling below economists' expectations and registering its third consecutive monthly decrease.
Notably, inflation expectations for the coming year rose to the highest level since May 2023, and the share of respondents expecting a recession in the next year increased to a nine-month high.
Consumer sentiment declined largely due to concerns over tariffs and potential mass layoffs of federal workers.
Economists warn that this decline in consumer confidence could potentially lead to reduced spending and economic stagnation in the near future.
Why Eggs Are Still So Expensive
As of February 21, 2025, the average wholesale price of eggs reached a record high of $8.07 per dozen, representing a 351% increase compared to the previous year.
The ongoing bird flu outbreak, which has resulted in the culling of more than 130 million birds since 2022, is the primary factor behind the egg price inflation.
The H5N1 strain of avian influenza has devastated poultry farms across the United States, leading to egg shortages and skyrocketing costs.
While the USDA has traditionally relied on culling infected flocks to control the spread of the virus, Kevin Hassett, director of the National Security Council, suggested that the administration may explore alternative methods such as improved biosecurity measures and medication.
Microsoft Cancels Some AI Data Center Leases, TD Cowen Says
Microsoft has reportedly canceled data center leases totaling "a couple of hundred megawatts" of capacity in the United States, according to a report by TD Cowen analysts.
This move raised concerns about whether Microsoft is securing more AI computing capacity than it needs in the long term. The company has allegedly voided leases with at least two private operators and pulled back on converting statements of qualifications into formal leases.
While the exact reasons for these cancellations remain unclear, TD Cowen suggests that Microsoft may be in an oversupply position, potentially overestimating the demand for AI capacity.
Despite these reports, Microsoft reiterated its commitment to spend $80 billion on AI infrastructure in the current fiscal year, stating that its plans remain on track to meet customer demand.
This development has sparked broader questions about the outlook for overall AI demand and the massive investments being made by tech giants in AI infrastructure.
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