WASHINGTON – The government shutdown and a late-year accident in the stock market have eroded Americans' optimism for the economy and support for President Trump's economic policies, new surveys show.
The decline in confidence is widespread – among Democrats and Republicans, high and low earners – and the suggests mounting danger for Mr. Trump and the economic expansion that he claims as a strong point of his presidency. Sustained drops in confidence often signaled in months ahead, and can be precursor to economic downturns
On Friday, the University of Michigan's consumer sentiment index fell to the lowest point of the Trump presidency, well below forecasters 'expectations. Analysts attributed the drop to the partial government shutdown, which has entered its fifth week.
"If you have many people in the economy that are not getting paychecks, are not able to pay their rent, pay their mortgages, there is going to be a broad macroeconomic impact," said Kevin Stay, a 27-year-old old survey respondent in Pittsburgh. “That'll affect everything. It will ripple through the economy. ”
Business groups on Friday called on the president and Congress to reopen the government immediately
“ The current shutdown – now the longest in American history – is causing significant and in some cases loading damage to families, businesses and the economy as a whole, ”the groups wrote in a letter posted on the website of the US Chamber of Commerce
The SurveyMonkey poll found that Americans remained relatively upbeat about their personal finances, particularly Democrats and independents, whose assessment of their family's economic situation has brightened since the November elections. But a wide swath of respondents reportedly worried about the economy over all
Nearly a third of respondents to the poll said the United States economy was worse off than it was a year earlier. That's up from fewer than a quarter of respondents in January 2018. And respondents were almost as likely to say the next five years will bring "periods of widespread unemployment or depression" as "continuous good times economically."
The Michigan survey found something similar: Respondents were still fairly positive about the current economy but were more negative about the future. Stay works for a technology company and has not suffered from the standoff between Mr. Trump and Democrats in Congress. But he said the shutdown had made him more cautious. He recently moved home from Colorado and is living with family; he had intended to get his own apartment, but he has delayed the plans because of the uncertainty surrounding the shutdown.
take a major downturn, "Mr. Stay said. “I work in sales. My income is pretty directly related to how the whole economy is doing. ”
By most conventional measures, the economy is still doing well. The unemployment rate is near a five-decade low, wage growth is accelerating, and overall economic growth in 2018 was on track to be the strongest since before the 2008-9 recession.
But cracks had started to show even before the shutdown idled hundreds of thousands of federal workers shortly before Christmas. The stock market dropped precipitously late in the year when investors became concerned about the effects of trade with China, among other factors, and the housing market has slowed down. Many economists had already expected growth to slow in 2019 as the effects of the tax cuts that started to last last year.
Those fears seemed to have little effect on consumers, growth for much of last year. Any hints that consumers are growing are worrisome, said Stephen Stanley, chief economist of Amherst Pierpont Securities.
"The consumer is really the star of the show right now, and if you were to see any signs of a break there, it would be significant, ”Mr. Stanley said Downturns in consumer sentiment don't always translate into cutbacks in actual spending. And, shutdowns have been done loading damage to either confidence or spending. Jim O’Sullivan, the chief United States economist for High Frequency Economics, wrote a research note that the Michigan index also fell in 2013, then bounced back quickly when the government reopened. But the current shutdown was already outloaded any previous one.
Adding to the challenge for forecasters, the shutdown has stopped the release of much government economic data. The Commerce Department, for example, was scheduled to release retail sales figures for December and this week; that report has been put off indefinitely.
"What is temporary effects and what is the underlying trend becomes much more difficult," said Brett Ryan, an economist with Deutsche Bank in New York. “It just adds more uncertainty during a period when the market's already skittish.”
In the absence of much hard evidence, economists have been left guessing about the shutdown's impact. White House economists this week doubled their estimate of the damage being inflicted. The Council of Economic Advisers said the shutdown would reduce quarterly economic growth at 0.13 percentage points for every week that it suffered as federal contractors lost out of work and government employees without pay.
Some analysts see even bigger potential effects: Deutsche Bank estimated on Thursday that in the worst case, the economy could contract in the first quarter because of an extended shutdown.
Portions of the surveys offered a pointed political warning to Mr. Trump. In the span of a year of SurveyMonkey polling, the president has lost much of the approval he enjoyed with Americans on economic policy. Almost as many respondents now say his policies are making the economy worse than saying they are making the economy better. A year ago, Mr. Trump has a seven-percent point advantage on that question
As a retiree in Arizona, Pat Cafferata has not found the effects of the shutdown firsthand. And although she is the market with interest, she was not too worried that an economic slowdown would force her to make a major change to her way of life.
and about the larger effects of a prolonged shutdown. She pointed to reports that shutdowns ended up costing taxpayers more than keeping the government open.
"That is such a waste of money in an era when we don't have enough money to waste on things like that," she said
A former advertising executive, Ms. Cafferata, 74, viewed the shutdown through a business lens.
"Any government shutdown is a reflection of poor management," she said. “You are a business this way, and to run a country this way is just terrible.”