U.S. consumer sentiment falls to two-year low

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U.S. consumer sentiment in January plunged to the lowest level in more than two years due in part to the lengthy partial government shutdown.

The preliminary reading of the index of consumer sentiment in January fell to 90.7 from 98.3 in the previous month, to the lowest level since October 2016, according to a survey released by the University of Michigan on Friday.

"The decline was primarily focused on prospects for the domestic economy, with the year-ahead outlook for the national economy judged the worst since mid-2014," Richard Curtin, chief economist of the survey, said in a statement.

"The loss was due to a host of issues including the partial government shutdown, the impact of tariffs, instabilities in financial markets, the global slowdown, and the lack of clarity about monetary policies," Curtin said.

Snow gathers on a fence surrounding the White House during a winter storm on the 23rd day of the U.S. government shutdown, January 13, 2019. /VCG Photo‍

The index of consumer sentiment is closely watched by economists and analysts as an indicator of future consumer behavior. Sharp declines in confidence could signal weaker consumer spending and economic growth in the months ahead.

John Williams, president of the Federal Reserve Bank of New York, said on Friday that the government shutdown is an emerging headwind to the economic growth. He expected the shutdown to take 0.5-1 percentage point off the first-quarter growth depending on how long the impasse would last.

The shutdown, which affected a quarter of the federal government and forced 800,000 federal workers to miss their paychecks, enters its 28th day Friday, with no end in sight.

Source(s): Xinhua News Agency