“Consumer sentiment declined in early January to its lowest level since Trump was elected,” the University of Michigan said on Friday.
Key takeaways from the press release
- The decline was primarily focused on prospects for the domestic economy, with the year-ahead outlook for the national economy judged the worst since mid 2014.
- The loss was due to a host of issues including the partial government shutdown, the impact of tariffs, instabilities in financial markets, the global slowdown, and the lack of clarity about monetary policies.
- While the January falloff in optimism is certainly consistent with a slowdown in the pace of growth, it does not yet indicate the start of a sustained downturn in economic activity.
- Consumers now sense a need to buttress their precautionary savings, which is typically done by reducing their discretionary spending.
- Evolving job and wage prospects, which were slightly weaker in early January, are critical to extending the current expansion.
January (preliminary) results
- Index of Consumer Sentiment at 90.7 vs 98.3 in December.
- Index of Current Economic Conditions at 110 vs 116.1 in December.
- Index of Consumer Expectations at 78.3 vs 87 in December.
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