Consumer confidence in the U.S. sank to its lowest point since President Trump took office, thanks to a host of factors that included a government shutdown that stretched into its 27th day Friday.
The University of Michigan’s monthly report on U.S. consumer confidence fell to 90.7 in January from 98.3 in December 2018 in what the university measured as “its lowest level since Trump was elected.”
Concerns about the U.S. economy caused the sudden drop as consumers faced a government shutdown, stock-market volatility, trade tensions, and uncertainty about where interest rates are headed, the survey said.
“Aside from the direct economic impact from these various issues on the economy, the indirect effect meant that half of all consumers believed that these events would have a negative impact on Trump’s ability to focus on economic growth,” Richard Curtin, the chief economist in charge of the university’s consumer survey said in a note.
Trump vowed in December to take responsibility for the partial government shutdown that has, as of Friday, left 800,000 federal workers without pay for nearly four weeks. The move has cost federal workers $5,000 in wages on average, rendered government servers vulnerable to hackers, led to concerns about the safety of air travelers in the U.S., affected programs ranging from farm subsidies to drug approvals to school lunches, and prompted largely crowdsourced food banks to pop up to support affected workers. It may even derail travel to the Super Bowl next month.
The Trump administration indicated this week that, if a shutdown continues through January, it could cause the U.S. gross domestic product to fall by half a percentage point this quarter. Earlier this month, Trump said he might let the shutdown last “for years.”
The financial-market volatility that the survey referenced has stabilized somewhat in recent weeks. The Dow Jones Industrial Average rose 1% Friday on encouraging news about the trade tensions between the U.S. and China, helping the benchmark stock index to close the week up for the fourth straight week, its longest weekly winning streak since August.
In the survey conducted earlier this month, however, consumers seemed to be put off by what was at the time relentless headlines about other events that could stymy the U.S. economy.
“Consumers now sense a need to buttress their precautionary savings, which is typically done by reducing their discretionary spending,” Curtin said. “Evolving job and wage prospects, which were slightly weaker in early January, are critical to extending the current expansion.