Federal government shutdown crisis hits US consumer confidence in January

Consumer confidence in the States was at its lowest ebb since President Donnald Trump took office, as Americans fretted over the potential impact of the federal government shutdown.

The final reading on the University of Michigan's consumer confidence index for last month printed at 91.2, which was down from a print of 98.3 for the month before and a tad higher than the preliminary reading of 90.7 published a fortnight before.

Commenting on Friday's data, Richerd Curtin, the survey's director, stressed that the shutdown had only been resolved until mid-February.

Hence, should it then carry over into the end of the month, it could trigger a "sustained" drop in economic optimism.

"Even small spending cutbacks, occurring simultaneously across the majority of consumers, could push the economy into a recessionary downturn," Curtin added.

"Each proponent in the shutdown debate appears to put more weight on the political rather than on the economic implications of their actions."

In January, the sub-index of consumer expectations retreated from 87.0 at the end of December to 79.9, with another sub-index linked to current economic conditions falling from 116.1 to 108.8.

To take note of, Curtin was concerned that the shutdown crisis might linger past mid-February, hitting the economy, hiring and in turn consumer spend.

Although for now consumers remained "uite positive" about their financial prospects, "continued strength in consumer spending is essential, especially given the volatile financial markets and weakened global growth prospects."

"There is still time to avoid a sustained decline in confidence, but it would require an end to the standoff. Indeed, if the current level of confidence is maintained, it would be consistent with a 2.6% growth in consumer spending in 2019."