Skip to main content

Consumer confidence falls again amid government shutdown

Consumer confidence fell to an 18-month low in January amid market volatility and the government shutdown.

The Conference Board’s Consumer Confidence Index decreased in January, following declines in December and November. The Index now stands at 120.2, its lowest level since July 2017, and down from 126.6 in December. Economists polled by MarketWatch had forecast a reading of 124.0.

The Present Situation Index, which is based on consumers’ assessment of current business and labor market conditions, declined marginally, from 169.9 to 169.6. In a sharper dip, the Expectations Index, based on consumers’ short-term outlook for income, business and labor market conditions, decreased from 97.7 last month to 87.3 this month.

Lynn Franco, senior director of economic indicators at The Conference Board, noted that while consumer confidence fell in January, the Present Situation Index was virtually unchanged, suggesting economic conditions remain favorable.

“Expectations, however, declined sharply as financial market volatility and the government shutdown appear to have impacted consumers,” Franco said. “Shock events such as government shutdowns tend to have sharp, but temporary, impacts on consumer confidence. 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.”

Consumers’ appraisal of current conditions was little changed in January. The percentage of consumers claiming business conditions are "good" was virtually unchanged at 37.4%, while those saying business conditions are "bad" decreased from 11.6% to 11.1%.

Consumers’ assessment of the labor market was mixed. Those stating jobs are "plentiful" increased from 45.5% to 46.6%, while those claiming jobs are "hard to get" also increased, from 12.2% to 12.9%.

Consumers’ optimism about the short-term future was more pessimistic in January. The percentage of consumers expecting business conditions will improve over the next six months decreased from 18.0% to 16.0%, while those expecting business conditions will worsen increased from 10.6% to 14.8%.

Consumers’ outlook for the labor market was also less favorable. The proportion expecting more jobs in the months ahead decreased from 16.6% to 14.7%, while those anticipating fewer jobs increased, from 14.6% to 16.5%.

Regarding their short-term income prospects, the percentage of consumers expecting an improvement declined from 22.4% to 18.2%. But the proportion expecting a decrease also declined, from 7.6% to 7.1%.

The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by Nielsen. The cutoff date for the preliminary results was Jan. 17.
This ad will auto-close in 10 seconds