Consumer confidence plunges to lowest level since Trump's election

Consumer confidence plunges to lowest level since Trump's election
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U.S. consumer confidence has plunged to its lowest level since the month before President TrumpDonald John TrumpJulián Castro: It's time for House Democrats to 'do something' about Trump Warren: Congress is 'complicit' with Trump 'by failing to act' Sanders to join teachers, auto workers striking in Midwest MORE’s election, according to a survey released Friday by the University of Michigan.

The Michigan consumer sentiment index fell to 90.7, a drop of 7.7 percentage points from December 2018 and the lowest level since October 2016.

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Consumer confidence about the future of the economy also plunged to 78.3, a fall of 10 percentage points from December.

Richard Curtin, the survey’s chief economist, pinned January’s sharp decline to a slew of economic headwinds and headaches facing consumers and investors.

“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,” Curtin said.

Michigan’s monthly confidence survey is closely watched by economists and analysts as an indicator of future consumer behavior.

Sharp declines in confidence can often preview difficulty for the U.S. economy, which depends heavily on steady consumer spending.

Consumer confidence surged after Trump’s election. Republicans and Wall Street rallied on Trump’s promises to cut taxes and rip up regulations, while Democrats expected the economy to hold strong after years of moderate growth under former President Obama.

The U.S. economy still boasts unemployment near record lows and solid growth, but Trump’s trade battles with China and Europe, the 28-day government shutdown, stock market volatility and slowdowns in emerging market economies have dampened the domestic outlook.

Analysts expect the pace of U.S. growth to slow in 2019, but say the shutdown poses a dire threat to the economy.

More than 800,000 federal workers have missed paychecks during the shutdown, which could trigger a recession, according to projections from economists in the White House and private sector.

Curtin said the January confidence drop “is consistent with a slowdown in the pace growth,” but “does not yet indicate the start of a sustained downturn.”