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News January 30, 2019

Survey: US Consumer Confidence Fell For the Third Straight Month in January

Consumer spending drives the United States’ economy, so sentiment readings are potential important economic indicators for promotional product professionals.

By  Christopher Ruvo

Shaken by stock market volatility, trade tensions with China and the partial federal government shutdown, U.S. consumer sentiment declined sharply in January, marking the third straight month-over-month drop, according to the Conference Board Consumer Confidence Survey.

This month, the reading on the survey’s Consumer Confidence Index was 120.2, down from 126.6 in December. The Present Situation Index, which measures consumers’ view on current business and labor market conditions, slipped marginally from 169.9 last month to 169.6 in January. The real blow, however, came in the Expectations Index. Measuring consumers’ outlook for income, business and labor market conditions, the Expectations Index plunged more than 10 points, freefalling from 97.7 in December to 87.3 in January.

Indeed, the percentage of consumers expecting business conditions to improve over the next six months decreased from 18.1% to 16%. Those expecting business conditions to worsen rose from 10.6% to 14.8%. Meanwhile, the proportion of consumers anticipating more jobs in the months ahead decreased from 16.6% to 14.7%. Those anticipating fewer jobs increased, from 14.6% to 16.5%.

Some analysts view the darkening outlook among consumers as a sign that a recession is near:

Nonetheless, other analysts were more optimistic. “Shock events such as government shutdowns tend to have sharp, but temporary, impacts on consumer confidence,” said Lynn Franco, senior director of economic indicators at The Conference Board. “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."

Building on that potential bright note, the Conference Board’s survey showed that consumers still generally feel good about current economic conditions –a sentiment that could perhaps be buoyed in the weeks ahead if the federal government remains fully in business following its recent reopening.

According to the Conference Board, the percentage of consumers claiming that current business conditions are "good" was virtually unchanged in January at 37.4%. Those saying current business conditions are "bad" decreased from 11.6% to 11.1%. Relatedly, consumers’ stating jobs are currently "plentiful" increased from 45.5% to 46.6%, although that was partially offset by consumers claiming jobs are "hard to get" increasing from 12.2% to 12.9%

The heavier mood among consumers regarding the future that the Conference Board recorded correlates with the findings of another recent survey on consumer sentiment. The preliminary January reading on the University of Michigan’s Index of Consumer Sentiment was 90.7, down 7.7% from December and 5.2% from January 2018. The January 2019 tally meant sentiment was at the lowest level of Donald Trump’s presidency.