Consumer Sentiment Index Drops On Shutdown's Effect

The late-month end of the government shutdown, or at least temporary end, had only limited impact on the consumer sentiment index which ended January at 91.2, up 5 tenths from mid-month but down a very steep 7.1 points from December.

The shutdown's effect on sentiment is having the greatest strain on expectations where confidence is sliding, with this component likewise down 7.1 points in the month to 79.9. Also sliding, however, is the assessment of current conditions, down 7.3 points to 108.8. All these readings, whether the composite or the two components, are at their lowest levels since October 2016.

Inflation readings across economic reports have been very tame including the closely watched inflation expectations of this report. Year-ahead expectations are unchanged at 2.7 percent with 5-year expectations inching 1 tenth higher but still modest at 2.6 percent.

The drop in confidence readings has been the biggest negative in January's of economic data. This points to a psychological impact from the shutdown though the shutdown's actual impact on the economy, judging if nothing else than on this morning's employment report, may prove minimal.