Consumer confidence took another hit in January, as the government partially shut down while Capitol Hill Democrats and the Trump White House battled over funding for a border wall.
The Conference Board’s Consumer Confidence Index decreased in January, the third consecutive steep monthly decline.
The index fell to 120.2 from December’s revised down 126.6. Economists had expected a milder decline to 124.3.
Despite the government shutdown, consumers’ view of current conditions was little changed. The percentage of consumers claiming business conditions are “good” was virtually unchanged at 37.4 percent, while those saying business conditions are “bad” actually fell from 11.6 percent to 11.1 percent.
But optimism about the future turned much more pessimistic in January, the third consecutive monthly steep decline in expectations. The percentage of consumers expecting business conditions will improve over the next six months fell from 18.1 percent to 16.0 percent, while those expecting business conditions will worsen increased from 10.6 percent to 14.8 percent.
Consumers’ assessment of labor market conditions was mixed. Those stating jobs are “plentiful” increased from 45.5 percent to 46.6 percent, while those claiming jobs are “hard to get” also increased, from 12.2 percent to 12.9 percent. But the outlook was less favorable. The share expecting more jobs in the months ahead decreased from 16.6 percent to 14.7 percent, while those anticipating fewer jobs increased, from 14.6 percent to 16.5 percent.
And fewer consumers expect their incomes to improve in the near-term future. The share expecting an improvement declined from 22.4 percent to 18.2 percent, while the proportion expecting a decrease also declined, from 7.6 percent to 7.1 percent.
Although consumer confidence has declined in recent months, it remains at a very high level. Consumer confidence remains well above levels that persisted for years prior to the election of President Donald Trump.