A key index of consumer confidence dropped to its lowest point since before President Trump’s election on Friday, the latest sign that the ongoing government shutdown, market instability and Trump’s trade wars are dragging on the economy.
The University of Michigan Consumer Sentiment Index, a highly respected survey and monthly economic indicator, found that consumers’ confidence in the economy fell sharply in the last month amidst the partial government shutdown, which is now the longest in U.S. history. The index fell to 90.7 this month, down from 98.3 in December. Economists had been expecting this month’s measure to be above 96.
“Consumer sentiment declined in early January to its lowest level since Trump was elected. The decline was primarily focused on prospects for the domestic economy, with the year-ahead outlook for the national economy judged the worst since mid 2014,” Richard Curtin, the survey’s chief economists, said in a statement explaining the dip. “The loss was due to a host of issues including the partial government shutdown, the impact of tariffs, instabilities in financial markets, the global slowdown, and the lack of clarity about monetary policies.”
The hit in consumer confidence is just the latest sign that the government shutdown is taking a toll on the economy — and the longer it lasts, the more damage it will do.
New York Federal Reserve President John Williams warned in a speech Friday morning that he and other policymakers were “seeing some emerging headwinds to growth from the partial government shutdown in the United States and elevated geopolitical uncertainties abroad.”
And Williams estimated a serious impact from the shutdown.
“It is going to be a drag on consumer spending and the economy in the first quarter directly, enough to pull growth down by up to a half percentage, or maybe even a percentage point, if it continues,” he said.
He’s not the only one seeing major damage from the shutdown. The head of the White House Council of Economic Advisers admitted earlier this week that the shutdown’s impact was roughly twice what they’d initially calculated, reducing U.S. quarterly economic growth 0.13 percentage points for every week that it lasts, as opposed to the 0.1 percentage points every two weeks they’d originally projected.
The partial shutdown appears likely to last some time longer, as President Trump is refusing to budge from his demand that he get money for a U.S.-Mexico border wall in any deal to reopen the government. Democrats continue to reject that demand.
The biggest danger to the US economy is not a caravan of brown people at the border; it’s one old white man in the White House.
Agree, Dump is doing just about all he can to crash the economy. And you can take a sure bet he will blame everyone but himself
Can anyone explain to me why the stock market continues to climb? Is it that disconnected from a country going down the tubes, government not operating, people suffering? Or is this typical of a country shedding democracy and descending into fascism?
Note to Individual 1: OWN IT, BITCH!!!
I moved my 401K into bonds and income funds two weeks ago. Timing the market is stupid, I know, but I just don’t see how the Obama Economy™ can keep rolling on with Trump continually jamming sticks into the spokes. We’re due for another Republican recession.
(I am not an investment professional and this is not investment advice. Though I did stay in a Holiday Inn a couple of years back.)