U.S. Consumer Confidence Falls to 18-Month Low Amid Shutdown

(Bloomberg) -- U.S. consumer confidence slumped in January to the weakest level since July 2017 as optimism on the economy soured during the longest-ever U.S. government shutdown.

The confidence index fell to 120.2 from 126.6, the New York-based Conference Board said in a report Tuesday. That missed economist estimates in a Bloomberg survey calling for a drop to 124. The measure gauging consumer expectations slumped to the lowest since October 2016 while Americans’ views on present conditions weakened for a second month.

Key Insights

Official’s View

• Shock events like government shutdowns “tend to have sharp, but temporary, impacts on consumer confidence,” Lynn Franco, senior director of economic indicators at the Conference Board, said in a statement. “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.”

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• On the bright side, the share of consumers planning to buy a home within six months jumped to 7.8 percent, a record in data back to 1967, as mortgage rates declined.
• The share expecting business conditions to be worse in six months was the largest since November 2013, just after the last lengthy government shutdown.
• The labor differential -- which measures the gap between respondents saying jobs are plentiful and those who say they’re hard to get -- held near the highest level in almost 18 years, a sign the labor market remains strong.
• Buying plans showed mixed responses. The measure of consumers planning to purchase a car within six months held up, while the share expecting to purchase major appliances fell to an 18-month low.

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