Consumer Sentiment Index Plunges

In what is the first major economic indication of trouble tied to the government shutdown, the consumer sentiment index plunged to a 90.7 reading that is far below Econoday's low estimate for 95.5. The expectations component fell nearly 9 points to 78.3 with current conditions also taking a hit, down more than 6 points to 110.0.

Inflation expectations proved steady, unchanged at 2.7 percent for the year-ahead outlook which contrasts with Wednesday's 3 tenths drop to 2.0 percent for the Atlanta Fed's business expectations measure. The 5-year outlook in today's report is up 1 tenth to 2.6 percent.

The report cites other negatives aside from the shutdown including the impact of tariffs and instability in the financial markets. But the shutdown is the front and center issue right now facing the nation and the drop in January's preliminary index -- by far the very steepest since early in the economic cycle -- suggests it may very well be rattling the confidence of the nation's consumers.