The numbers: The University of Michigan’s consumer-sentiment index plunged to a reading of 91.2 in January from 98.3 in December, the worst since Donald Trump was elected president.
That was a touch better than the mid-January reading of 90.7.
What happened: The government shutdown rattled consumers and, unlike previous bouts, the numbers didn’t materially improve even after some 800,000 workers went back to work. That’s because there’s the possibility of another shutdown on Feb. 15, as Congressional negotiators remain at an impasse over funding the border wall desired by Trump.
Both the current conditions and expectations index fell during January.
The big picture: This level of confidence is consistent with 2.6% annual growth in consumer spending, the University of Michigan said. If job gains continue — and in January, the U.S. added 304,000 positions — spending should continue.
What they’re saying: “Even small spending cutbacks, occurring simultaneously across the majority of consumers, could push the economy into a recessionary downturn. Each proponent in the shutdown debate appears to put more weight on the political rather than on the economic implications of their actions,” said Richard Curtin, chief economist of the survey.
Market reaction: U.S. stocks
saw solid gains on Friday, amid a flood of economic data including the jobs report and manufacturing sentiment.