US consumers less upbeat about economy: survey
US consumer confidence saw a steep decline in December amid a sharp selloff on Wall Street and political turmoil in Washington, according to a monthly survey released Thursday.
The cutoff date for the survey was December 13 -- before the US government shutdown over funding for a border wall -- but financial markets already were already showing the impact of President Donald Trump's trade conflict with China, as well as the prospect of a slowing economy amid rising interest rates.
The Conference Board's consumer confidence index fell more than eight points -- the biggest change in any direction this year -- to 128.1, the survey showed.
That was five points below what economists forecast, and a retreat from the 18-year high of 137.9 in October.
The decline was nearly all the result of the erosion of consumers' confidence in the short-term economic outlook, as the expectations index fell more than 13 points to 99.1, back below 100 for the first time in a year.
"While consumers are ending 2018 on a strong note, back-to-back declines in Expectations are reflective of an increasing concern that the pace of economic growth will begin moderating in the first half of 2019," said Lynn Franco, the Conference Board's director of economic indicators.
- Stock jitters hit confidence -
Analysts note that the decline reflects the falling stock market, which has erased all of the 2018 gains in just the last few weeks, and declined again Thursday, by midday returning most of the one-day gains won on Wednesday.
Economist David Deull with IHS Markit said the decline in the confidence index was the largest drop since July 2015.
While the government shutdown was not yet a factor he warned that if it "is prolonged with continued political bickering, consumer confidence could head further south."
Despite a strong labor market, consumers' feelings about six months in the future have been moderating, indicating a sense the economy may have peaked.
A much smaller share now expect to see more jobs ahead, and a slightly larger amount expect fewer jobs. The survey showed the same pattern about income.
"Expectations regarding job prospects and business conditions weakened, but still suggest that the economy will continue expanding at a solid pace in the short-term," Franco said.
The US government shutdown, which stems from Trump's demand for funding to build a southern border barrier, means financial markets have a limited set of official data to gauge the state of the economy -- likely making them more reactive to any bad news.
? 2018 AFP