U.S. consumer morale lowest in two years
The drop in confidence reported by the University of Michigan on Friday is the clearest sign yet that the impasse in Washington over Trump’s demands for $5.7 billion (£4.4 billion) to help build a wall on the United States’ border with Mexico was negatively impacting the economy.
Consumer spending accounts for more than two-thirds of the U.S. economy. The University of Michigan said its consumer sentiment index fell 7.7 percent to a reading of 90.7 this month, the lowest reading since October 2016 and the steepest drop since September 2015. Economists had forecast a reading of a 97.0.
The survey’s measure of current economic conditions decreased to 110.0 from a reading of 116.1 in December. Its measure of consumer expectations tumbled to a reading of 78.3, the lowest since October 2016, from 87.0 in late December.
The broad-based jump in manufacturing output in December reported by the Federal Reserve could allay fears of a sharp slowdown in factory activity.
Manufacturing activity, which accounts for about 12 percent of the economy, is slowing as some of the boost to capital spending from last year’s $1.5 trillion tax cut package fades. In addition, a strong dollar and cooling growth in Europe and China are hurting exports. Lower oil prices are also slowing purchases of equipment for oil and gas well drilling. ■