US consumer confidence falls as politics weigh on outlook
US CONSUMER confidence unexpectedly sank in December for the first time in three months on concerns about the outlook for the economy amid uncertainty around the Trump administration’s policies.
The Conference Board’s gauge of confidence decreased to 104.7, led by consumers over 35 years old, data released on Monday (Dec 23) showed. That was well below the median estimate in a Bloomberg survey of economists, and a measure of expectations hit a five-month low.
In write-in responses to the survey, consumers increasingly cited politics and tariffs. A special question showed that 46 per cent of respondents expected tariffs to raise the cost of living, while 21 per cent expected tariffs to create more US jobs.
The results mirror similar concerns about tariffs in surveys, including a University of Michigan poll that showed a surge in the share of people who believe that they should buy durable goods now to avoid higher prices in the future.
“The post-election pick-up in sentiment has faded quickly,” Samuel Tombs, chief US economist at Pantheon Macroeconomics, said in a note. “The cutoff for the survey was Dec 16, before the FOMC meeting and the associated drop in stock prices, so we think the deterioration likely reflects the incoming administration starting to talk about spending cuts, which were not part of Trump’s election pitch.”
Consumers in the Conference Board survey were less optimistic about the outlook for business conditions and their own income prospects. A measure of expectations for the next six months and a gauge of present conditions both dropped.
“Compared to last month, consumers in December were substantially less optimistic about future business conditions and incomes.” Dana Peterson, chief economist at the Conference Board, said. “Moreover, pessimism about future employment prospects returned after cautious optimism prevailed in October and November.”
Still, the share of consumers who said jobs were currently plentiful rose to 37 per cent. Meanwhile, the percentage who said jobs were hard to get dropped to 14.8 per cent. The difference between the two – a metric closely followed by economists to gauge the job market – widened for the third month in a row.
Separate data on Monday showed that new-home sales rebounded last month as builders and consumers sealed deals that had been delayed by storms in the South, and buyers took advantage of heavy sales incentives. Orders placed with US factories for business equipment also rose last month, posting the strongest monthly advance in over a year. BLOOMBERG
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