Consumer confidence has plummeted to its lowest level in 12 years, signaling potential economic trouble ahead. Christine Short, head of research at Wall Street Horizon, a TMX Company, joined TheStreet to discuss the state of the U.S. consumer.

Related: Bank of America CEO offers surprising take on consumer spending

Full Video Transcript Below:

CHRISTINE SHORT: Consumer confidence falling to its lowest level in many years says a lot of things about how consumers are feeling right now. It doesn’t always line up with how they’re actually spending their money. But what we saw from the conference board’s read on consumer confidence for current expectation was, you know, a fourth consecutive decline in that index. 

But what was even more troublesome was future expectations. That reading fell to its lowest level in 12 years. The index came in at about 65.2. The baseline for that reading is 80. So anything under 80 supposedly signals a recession coming. So it’s the future expectations or what? Consumers are very concerned about. If you looked at why it’s everything from tariffs which could possibly increase prices and really the labor market, if you looked at expectations for what consumers are expecting for labor coming up in the next 12 months, that reading was lower. 

As far as how many jobs do you think will be available, or do you think there will be more jobs available in the future than there are now? And that reading decreased to about 16.5% Last month it was 18.5% So we’re seeing consumers a little more worried about their jobs and not only keeping their jobs, but if they were to lose one, not so confident, they could get another one very quickly. And so that was telling. But like I said, some of the data like we recently saw doesn’t always keep up to pace with that. Consumers still out there and spending for the most part. But we can see some uncertainty creeping in there. 

The U.S. consumer has been resilient for a couple of years now. Right as we’ve seen prices tick up in increasingly stay very low. Inflation staying sticky. The us consumer has continued to spend. And that’s what we’re known for right. Like 2/3 of our GDP is consumer spending. Consumers are very good at spending. And that what that is part of what makes the us economy very strong. 

But like I said, we are starting to see some cracks, not only in sentiment but in credit card delinquencies. So I follow the New York Fed’s quarterly report on household debt and credit, and we are starting to see debt creep up. It was up about 0.5% in the fourth quarter from the prior quarter and the prior year. And then if you look at some of the delinquency data, it mainly credit cards and auto loans. We are seeing delinquency rates creep up over 30 days and even some in deep delinquency 90 plus days. So the consumer is feeling less certain they are still out there buying to some degree, but they are racking up that credit card debt in the meantime.

 And so it’ll be really enlightening to see over the next earnings season what some of the big box retail names are saying. One thing that was in the recent dollar tree report was that they are seeing more higher income folks trading down coming into dollar tree, and that they’ve seen this trend. There is a value based consumer consumer that’s looking out there looking for a bargain. And we’ve seen similar comments from Walmart as well.