Consumer Confidence Suffers from Government Shutdown

The U.S. government shutdown has had a negative effect on consumer expectations. The Conference Board’s measure of consumer confidence declined each month from November through January. It appears the shutdown had a major effect on consumers’ expectations, but not so much on their perception of the present situation. The composite value of consumer confidence in January was 120.2, down from 137.9 in October. The three-month moving average (3MMA) decreased from 136.5 in November to 127.7 in January, which was 2.4 points higher than in January last year.

We prefer to smooth the data with a moving average to reduce monthly volatility. The composite index is made up of two sub-indexes. These are the consumer’s view of the present situation and his or her expectations for the future. The present component is just barely above its nine-year trend line, but expectations have fallen below trend (Figure 1).