US consumers less upbeat about economy: Survey

US consumers less upbeat about economy: Survey

US consumers
File photo of consumers holding shopping bags as they walk along Michigan Avenue in Chicago, Illinois. (Joshua Lott/Getty Images/AFP)

WASHINGTON: US consumer confidence suffered the biggest decline in more than three years in December amid a sharp selloff on Wall Street and political turmoil in Washington during the month, according to a survey released on Thursday (Dec 27).

The cutoff date for the survey was Dec 13 - before the US government shutdown over funding for a border wall - but financial markets already were already showing the impact of President Donald Trump's trade conflict with China, as well as the prospect of a slowing economy amid rising interest rates.

The Conference Board's consumer confidence index fell more than eight points - the biggest change in any direction this year - to 128.1, the survey showed.

That was five points below what economists forecast, and a retreat from the 18-year high of 137.9 in October.

The decline was nearly all the result of the erosion of consumers' confidence in the short-term economic outlook, as the expectations index fell more than 13 points to 99.1, back below 100 for the first time in a year.

"While consumers are ending 2018 on a strong note, back-to-back declines in expectations are reflective of an increasing concern that the pace of economic growth will begin moderating in the first half of 2019," said Lynn Franco, the Conference Board's director of economic indicators.

STOCK JITTERS HIT CONFIDENCE

Analysts note that the decline reflects the falling stock market, which has erased all of the 2018 gains in just the last few weeks.

But while Wall Street look headed for another rout on Thursday in the wake of the confidence data, bargain hunters came in in the last 30 minutes of trading sending all three major stock indexes to solid gains at the close.

Economist David Deull with IHS Markit said that while the government shutdown was not yet a factor in waning consumer sentiment, he warned that if it "is prolonged with continued political bickering, consumer confidence could head further south."

Despite a strong labour market, consumers' feelings about six months in the future have been moderating, indicating a sense the economy may have peaked.

A much smaller share now expect to see more jobs ahead, and a slightly larger amount expect fewer jobs. The survey showed the same pattern about income.

"Expectations regarding job prospects and business conditions weakened, but still suggest that the economy will continue expanding at a solid pace in the short-term," Franco said.

The US government shutdown, which stems from Trump's demand for funding to build a southern border barrier, means financial markets have a limited set of official data to gauge the state of the economy - likely making them more reactive to any bad news.

Source: AFP/de

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