WASHINGTON – Consumer sentiment in the U.S. fell in November to the lowest level in almost two years as households reeled from last month’s partial government shutdown.
The Thomson Reuters/University of Michigan preliminary consumer sentiment index for this month dropped to 72, the weakest since December 2011, from 73.2 in October. Economists in a Bloomberg survey called for an increase to 74.5, according to the median estimate.
Fiscal gridlock among lawmakers may be crimping Americans’ willingness to spend as households look to boost savings. Still, higher equities, falling gas prices and an improving job market are helping ease budgets in the weeks before the holiday retail season.
“We had a great deal of uncertainty around the federal government and whether the shutdown would have a lasting effect in terms of employment gains and the economy’s momentum,” said Robert Rosener, associate economist at Credit Agricole CIB in New York, who correctly projected the drop in sentiment. “As consumers see signs that growth is picking up, we think confidence will pick up alongside that.”
Forecasts of the 70 economists surveyed by Bloomberg ranged from 71.5 to 80. The index averaged 89 in the five years before December 2007, and 64.2 in the 18-month recession that ensued.
Another report Friday showed employers added more workers to payrolls in October than forecast by economists, betting that the world’s largest economy would weather the impact of the federal government shutdown.
The addition of 204,000 workers followed a revised 163,000 gain in September that was larger than initially estimated, Labor Department figures showed Friday in Washington. The median forecast of 91 economists surveyed by Bloomberg called for an increase of 120,000. The jobless rate rose to 7.3 percent from an almost five-year low.