Market Business News / YouTube Consumer Confidence Index 1547916984.jpg...
Market Business News / YouTube

Donald Trump is now officially playing with fire.  And our economy.  Hopefully, we can recover from the mess he is making.

The University of Michigan Consumer Sentiment Index, a highly respected survey and monthly economic indicator, found that consumers’ confidence in the economy fell sharply in the last month amidst the partial government shutdown, which is now the longest in U.S. history. The index fell to 90.7 this month, down from 98.3 in December. Economists had been expecting this month’s measure to be above 96.

The Consumer Expectations Index took an even greater hit.

Preliminary Results for January 2019

Jan Dec Jan M-M Y-Y
2019 2018 2018 Change Change
Index of Consumer Sentiment 90.7 98.3 95.7 -7.7% -5.2%
Current Economic Conditions 110.0 116.1 110.5 -5.3% -0.5%
Index of Consumer Expectations 78.3 87.0 86.3 -10.0% -9.3%
Next data release: Friday, February 01, 2019 for Final January data at 10am ET

After the worst Stock-market year since 2008, and the worst December since The Great Depression, the Trump shutdown threatens any meager gains made since he took office.

“Consumer sentiment declined in early January to its lowest level since Trump was elected. The decline was primarily focused on prospects for the domestic economy, with the year-ahead outlook for the national economy judged the worst since mid 2014,” Richard Curtin, the survey’s chief economists, said in a statement explaining the dip. “The loss was due to a host of issues including the partial government shutdown, the impact of tariffs, instabilities in financial markets, the global slowdown, and the lack of clarity about monetary policies.”

The bolded phrases above are directly connected to policies, decisions, and statements made by one single person:  President Donald J. Trump

This is his shutdown.

Congress had passed a unanimous plan to avoid it.  Trump SINGLE-HANDEDLY destroyed it.

These are his tariffs, and his alone.

Not even Republicans historically like tariffs as policy.

These are his market instabilities.  His and Mnuchin’s.

What they said and did in December caused nearly unprecedented drops in the market.

Trump also owns this monetary policy disaster.

“Trump resumes attack on the Fed as markets sink again”   

New York Federal Reserve President John Williams warned in a speech Friday morning that he and other policymakers were “seeing some emerging headwinds to growth from the partial government shutdown in the United States and elevated geopolitical uncertainties abroad.”

“It is going to be a drag on consumer spending and the economy in the first quarter directly, enough to pull growth down by up to a half percentage, or maybe even a percentage point, if it continues,” he said.

Oh and about Donny’s brain-addled hopes that he’s SAVING money with a shuttered government?

Wrong again…..

All pay owed No. of workers Furloughed Lost labor
Transportation $350,000,000 46,100 9,100 $69,088,937
Agriculture $300,000,000 95,000 44,000 $138,947,368
Interior $300,000,000 65,000 48,000 $221,538,462
Treasury $410,000,000 82,000 36,000 $180,000,000
Homeland Security $1,000,000,000 245,000 32,000 $130,612,245
Commerce $130,000,000 45,000 14,000 $40,444,444
Justice $700,000,000 107,000 12,000 $78,504,673
HHS $150,000,000 33,000 8,000 $36,363,636
HUD $55,000,000 7,400 6,100 $45,337,838
EPA $110,000,000 14,000 13,100 $102,928,571
NASA $140,000,000 18,000 17,200 $133,777,778
TOTAL 3,645,000,000 757,500 239,500 $1,180,000,000

Economic costs

Another major cost to the government comes through lower tax revenues. Shutdowns hurt the economy, and as it declines, so do tax collections.

Kevin Hassett, chair of the White House Council of Economic Advisors, said that the shutdown “should not have a long-run effect on GDP growth.” But he has offered two estimates of what the short term costs could be.

Initially, on Jan. 3, he said a rule of thumb is every two weeks cuts 0.1 percent from real GDP. The most recent government figures put the economy at $20.65 trillion, or  about $2.4 billion an hour. Twenty-four full shutdown days had passed on the day Delaney posted his tweet. Hassett’s rule of thumb yields a hit on the economy of $4 million an hour.

Hassett later upped his estimate, saying that the decline could be .26 percent every two weeks. That would raise the short term economic cost to about $10 million an hour.

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