Continuing the downward trend since Trump's inauguration, U.S. consumer confidence has declined for three consecutive months
In October, U.S. consumer confidence deteriorated for the third consecutive month, reflecting a shaky economic confidence under the pressures of government shutdown, rising inflation, and slowing job growth. The consumer confidence index is below the levels seen earlier this year and before Trump's presidency, approaching the lows of the inflation peak in 2021. Although inflation expectations for the next year have slightly decreased, they remain higher than the current actual levels. The impact of the government shutdown on consumer confidence is significant and may suppress consumer spending. The U.S. economy faces challenges of slowing hiring and rising recession concerns
According to the Zhitong Finance APP, on Friday, the latest data from the University of Michigan showed that U.S. consumer confidence deteriorated for the third consecutive month in October, reflecting further erosion of economic confidence under the dual pressures of a government shutdown, rising inflation, and slowing job growth. The overall index was slightly better than market expectations but still significantly lower than the levels at the beginning of this year and before Trump returned to the White House.
The data indicated that the consumer confidence index continued to decline in October, extending the downward trend that re-emerged after Trump took office. This year's low point is close to the lows seen during the peak inflation period in 2021. The survey also showed that inflation expectations for the next year slightly decreased from 4.7% in September to 4.6%, but still far above the current actual inflation level of 2.9%; long-term inflation expectations remained unchanged from the previous month.
This consumer confidence data is receiving particular attention because the government shutdown has led to the suspension of key economic reports such as official employment and inflation data. Consumer spending accounts for about two-thirds of U.S. economic activity and is an important indicator of economic trends. Experts point out that while government shutdowns typically cause limited direct damage to the economy, the impact on consumer confidence is often significant, thereby indirectly suppressing consumer spending.
According to an analysis by the Committee for a Responsible Federal Budget, during the last 35-day government shutdown from late 2018 to early 2019, the U.S. consumer confidence index fell sharply by more than 7 points, and previous shutdowns also saw varying degrees of decline.
Currently, the U.S. government shutdown has entered its 10th day, with Congress failing to pass a funding bill after seven votes by both parties, showing no signs of easing the deadlock. At this moment, the U.S. economy is at a delicate juncture: hiring has noticeably slowed, concerns about recession are rising, and inflation has not yet been fully controlled. Federal Reserve Chairman Powell stated last month that policymakers are trying to guide the economy through "turbulent times," facing a "challenging situation."
