Polls Show Government Shutdown Is Eroding Faith in Economy
WASHINGTON — The government shutdown and a late-year slump in the stock market have eroded Americans’ optimism for the economy and support for President Trump’s economic policies, new surveys show.
The decline in confidence is widespread — among Democrats and Republicans, high and low earners — and it suggests mounting danger for Mr. Trump and the economic expansion that he claims as a strong point of his presidency. Sustained drops in confidence often signal dampened consumer spending in the months ahead, and can be the precursor to broader economic downturns.
On Friday, the University of Michigan’s consumer sentiment index fell to the lowest point of the Trump presidency, well below forecasters’ expectations. Analysts attributed the drop largely to the partial government shutdown that has entered its fifth week.
Economic confidence also fell, across nearly all demographic groups, in a poll conducted this month for The New York Times by the online research firm SurveyMonkey.
The SurveyMonkey poll found that Americans remained relatively upbeat about their personal finances, particularly Democrats and independents, whose assessment of their family’s economic situation has brightened since the November elections. But a wide swath of respondents reported increasing worries about the economy over all.
Nearly a third of respondents to the poll said the United States economy was worse off than it was a year earlier. That’s up from less than a quarter of respondents in January 2018. And respondents were nearly as likely to say that the next five years will bring “periods of widespread unemployment or depression” as “continuous good times economically.” As recently as November, optimists outnumbered pessimists on that question by more than 10 percentage points.
The Michigan survey found something similar: Respondents were still fairly positive about the current state of the economy, but far more negative about the future.
Jim O’Sullivan, the chief United States economist for High Frequency Economics, called the shutdown a “key factor” in the declining Michigan sentiment numbers. He also noted what could be seen as a hopeful prospect for the Trump administration: that history suggests confidence rebounds after shutdowns end.
“The index fell during the 2013 shutdown as well and then bounced back quickly when the shutdown ended, and there was no significant follow-through to the spending data at the time,” meaning consumer behavior was not ultimately affected, Mr. O’Sullivan wrote in a research note. But he cautioned that the current shutdown had already outlasted any previous one.
Kevin Stay works for a technology company and hasn’t suffered personally from the standoff. But he said the shutdown had nonetheless made him more concerned about the direction of the economy.
“If you have that many people in the economy that are not getting paychecks, are not able to pay their rent, pay their mortgages, there’s going to be a broad macroeconomic impact,” he said. “That’ll affect everything. It’ll ripple through the economy.”
Mr. Stay, 27, recently moved home to Pittsburgh from Colorado and is living with family. He had intended to get his own apartment, but he has delayed those plans partly because of the uncertainty surrounding the shutdown.
“You’re not going to go out and make a major purchase if you’re worried the economy’s about to take a major downturn,” Mr. Stay said. “I work in sales. My income is pretty directly tied to how the whole economy is doing.”
Portions of the surveys offered a pointed political warning to Mr. Trump. In the span of a year of SurveyMonkey polling, Mr. Trump has lost much of the approval he enjoyed with Americans on economic policy. Nearly as many respondents now say his policies are making the economy worse as say they are making the economy better. A year ago, Mr. Trump held a seven-percentage-point advantage on that question.
As a retiree in Arizona, Pat Cafferata hasn’t felt the effects of the shutdown firsthand. And although she watches the markets with interest, she said she isn’t too worried that an economic slowdown will force her to make a major change to her way of life.
But she is worried about the people who are missing paychecks, and about the larger effects of a prolonged shutdown. She pointed to reports that past shutdowns ended up costing taxpayers more than keeping the government open.
“That is such a waste of money in an era when we don’t have enough money to waste on things like that,” she said.
A retired advertising executive, Ms. Cafferata, 74, viewed the shutdown through a business lens.
“Any government shutdown is a reflection of poor management,” she said. “You don’t run a business this way, and to run a country this way is just terrible.”