WASHINGTON: American consumers became more worried about job and business prospects in January, rattled by stock market volatility and the record-length government shutdown, according to a monthly survey released on Tuesday (Jan 29).
The Conference Board's consumer confidence index, which can be used to forecast consumer spending, sank for the third month in a row, hitting 120.2 - well below what economists had been expecting.
It was the lowest since July 2017.
While respondents' views about the current business environment and job markets were largely unchanged, the expectations index plunged by 10 points.
"Shock events such as government shutdowns ... tend to have sharp but temporary impacts on consumer confidence," Lynn Franco, the board's senior director for economic indicators, said in a statement.
"Thus it appears that this month's decline is more the result of a temporary shock than a precursor to a significant slowdown in the coming months."
President Donald Trump last week temporarily agreed to end the five-week partial government shutdown, which idled key government services and left 800,000 federal workers temporarily without pay.
The Congressional Budget Office estimated on Monday the shutdown had stripped US$11 billion out of the economy, but all but US$3 billion likely will be regained in coming months.
The share of consumers saying jobs currently were "plentiful" rose but so did the share of those saying they were "hard to get." And respondents were more pessimistic about jobs in the coming months.
The share of people expecting business conditions to worsen in the next six months bounced 4.2 points to 14.8 per cent while the share who say they will improve shrank 2.1 points to 16 per cent.
Ian Shepherdson of Pantheon Macroeconomics said consumer confidence had been riding a high since President Donald Trump's election but well above the actual growth of consumer spending.
The drop in the index "means the gap has now closed," he said in a client note.
The decline does not necessarily signal that spending growth is set to slow any more sharply than expected, he said.
"Still, it doesn't look good."