The partial government shutdown over the holidays and into the near year weighed heavily on American households’ sentiment of the economy. The University of Michigan’s consumer sentiment index was 91.2 in January, down from a reading of 98.3 at the end of last year. This marks the weakest sentiment figure recorded since October 2016.
Partisan turmoil in Washington is being blamed for the decline and concerns are growing about further declines in the coming months if there is another stalemate that leads to a second shutdown. Concerns that the longest government shutdown in U.S. history would have a significant impact on consumer confidence appear to have been lessoned by a stronger than expected economic data for December including the most recent employment report.
Longer term, consumer sentiment has steadily increased over the past couple of years as low unemployment and strong economic growth boosted confidence. Recent drops in mortgage rates may also boost how consumers feel about the long-term economy.
Today, conforming no-point 30-year fixed mortgage rates are averaging 4.375 percent, 15-year rates are near 3.75 percent and the 5-year ARM is averaging 4.25 percent.
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