U.S. consumer sentiment falls in January to lowest level in over two years

U.S. consumer confidence dropped in January to its lowest level in more than two years. The government shutdown was a drag on overall sentiment, but the underlying trend in consumer sentiment seems to be easing.

Consumer confidence index dropped to 91.2 in the month. Falls were almost balanced between the present situation and expectations components of the index. The partial government shutdown has been a drag on optimism. Given that the tentative resolution only gives funding until 15 February, uncertainty here might continue to be a drag on sentiment. The resolution did rise a bit than initially reported.

In spite of the shutdown, consumer confidence seems to be easing. Consumers’ attitudes towards large ticket purchases continue to trend lower. In a separately released report this week from the Conference Board, consumer sentiment is learned to have dropped for the third consecutive month in January.

“The more measured level of optimism demonstrated by these two indicators is likely to weigh on the pace of consumer spending this year”, said Wells Fargo in a research report.

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