Shutdown eroding consumer confidence
WASHINGTON — The government shutdown and a late-year slump in the stock market have eroded Americans’ optimism for the economy and support for President Donald Trump’s economic policies, new surveys show.
The decline in confidence is widespread — among Democrats and Republicans, high and low earners — and it suggests mounting danger for Trump and the economic expansion that he claims as a strong point of his presidency. Sustained drops in confidence often signal dampened consumer spending in the months ahead, and can be the precursor to broader economic downturns.
On Friday, the University of Michigan’s consumer sentiment index fell to the lowest point of the Trump presidency, well below forecasters’ expectations. Analysts attributed the drop largely to the partial government shutdown that has entered its fifth week.
Economic confidence also fell, across nearly all demographic groups, in a poll conducted this month for The New York Times by the online research firm SurveyMonkey.
The SurveyMonkey poll found that Americans remained relatively upbeat about their personal finances, particularly Democrats and independents, whose assessment of their family’s economic situation has brightened since the November elections. But a wide swath of respondents reported increasing worries about the economy overall.
Nearly a third of respondents to the poll said the U.S. economy was worse off than it was a year earlier. That’s up from less than a quarter of respondents in January 2018. And respondents were nearly as likely to say that the next five years will bring “periods of widespread unemployment or depression” as “continuous good times economically.” As recently as November, optimists outnumbered pessimists on that question by more than 10 percentage points.
The Michigan survey found something similar: Respondents were still fairly positive about the current state of the economy, but far more negative about the future.
Jim O’Sullivan, chief U.S. economist for High Frequency Economics, called the shutdown a “key factor” in the declining Michigan sentiment numbers.
He also noted what could be seen as a hopeful prospect for the Trump administration: that history suggests confidence rebounds after shutdowns end. But he cautioned that the current shutdown had already outlasted any previous one.