Get the app today! Download iPhone App Download Android App

US Consumer Confidence Hits 1.5-Year Low In January

Published on Jan 30 2019 8:00 AM in Retail tagged: Trending Posts / USA / Consumer Confidence / Government Shutdown

US Consumer Confidence Hits 1.5-Year Low In January

US consumer confidence fell to a 1.5-year low in January, as a partial shutdown of the government and financial markets turmoil left households nervous about the economy's near-term outlook.

The drop in confidence reported by the Conference Board on Tuesday mirrors another survey earlier this month, showing sentiment tumbling to its lowest level since President Donald Trump was elected more than two years ago, strengthening analysts' expectations that the economy was losing momentum.

"There's no way the Trump economics team forecast of 3% growth is going to be accurate this year if consumers' spirits don't brighten up a little," said Chris Rupkey, chief economist at MUFG in New York.

The Conference Board's consumer confidence index dropped by 6.4 points to 120.2 this month – the lowest reading since July 2017.

Government Shutdown

It blamed the third straight monthly decline in confidence on 'financial market volatility and the government shutdown', which had left consumers pessimistic about the short-term future.

The longest shutdown in US history ended on Friday, when Trump and Congress agreed to temporary government funding, without money for his US-Mexico border wall. According to the non-partisan Congressional Budget Office, the economy lost about $11 billion (€9.57 billion) during the five-week shutdown.

The cut-off date for the Conference Board's survey was 17 January. Consumers were also less upbeat about the labour market, with the share of those expecting more jobs in the months ahead falling, and those anticipating fewer employment opportunities rising.

Trump has said that he would be willing to shut down the government again if lawmakers do not reach a deal that he finds acceptable on border security.

US financial markets were little moved by the data.

Other data on Tuesday showed that the S&P CoreLogic Case-Shiller composite index of home prices in 20 metropolitan areas rose by 4.7% in November on a year-on-year basis – the smallest gain since January 2015, after advancing by 5.0% in October.

House Price Inflation

House price inflation is slowing, as demand cools and housing inventory increases. The moderation in house prices, together with an easing in mortgage rates, should help support demand and lift the housing market this year, after it struggled for much of 2018.

"With the weakness across much of the housing data in 2018, we have seen the pace of house price appreciation moderate across a range of different measures," said Daniel Silver, an economist at JPMorgan in New York.

"The house price data tend to lag many other housing indicators, and some of the more timely indicators have perked up a bit, now that mortgage rates have declined over the past couple of months," added Silver.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

Share on Facebook Share on Twitter Share on LinkedIn Share on Tumblr Share via Email