U.S. Consumer Confidence Weakens in January

WASHINGTON — U.S. consumer confidence slumped to the lowest level in more than 11-1/2 years in January amid mounting anxiety over a sluggish labor market and high prices, which could see households becoming more cautious about spending.

The surprise deterioration in confidence reported by the Conference Board on Tuesday was across political party affiliation, with survey respondents identifying as Independents the most pessimistic. It could add to pressure on President Donald Trump to address what economists and opponents have called an affordability crisis, which they have blamed on his policies, including sweeping tariffs on imports.

While the relationship between confidence and consumer spending has been weak, some economists were concerned about the slump being accompanied by poor perceptions of the labor market. Consumers' views of job availability were the weakest in nearly five years. Nonetheless, economists did not expect the decline in confidence to influence the outcome of the Federal Reserve's policy meeting. The U.S. central bank is expected to leave interest rates unchanged on Wednesday. Consumers' expectations were the lowest in nine months, which some economists said flagged a slowdown in spending.

"Admittedly, the expectations index has greatly overstated the weakness in spending in recent quarters," said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. "But we'd be surprised if its recent deterioration proves to be an entirely false signal, particularly given the recent stagnation in real incomes and the already rock-bottom personal saving rate."

The Conference Board's consumer confidence index plunged 9.7 points to 84.5 this month, the lowest level since May 2014. Economists polled by Reuters had forecast the index at 90.9. The cutoff date for the survey was January 16, well after the capture of Venezuelan President Nicolas Maduro by U.S. forces.

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