Consumer confidence eased in January, with the University of Michigan’s final sentiment index dropping to 92 from 92.6 in December. Falling equity values and weakness in overseas economies were “spontaneously” mentioned by one of three households with incomes in the top third of the earnings ladder, the most since 1997-1998 financial crisis in Asia, a report showed Friday. Alternate measures, including one from the Conference Board and the Bloomberg Consumer Comfort Index, previously showed households remain upbeat.
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American companies, meanwhile, continue to face challenges posed by the strengthening dollar, which both makes their goods more expensive to sell to foreign customers while imported products become cheaper for U.S. consumers. That’s been exacerbated by concerns that global growth is slowing, led by emerging-market economies such as China.
A plunge in oil markets has caused energy companies to slash investment. For all of last year, outlays for structures used in mining and to extract oil and gas plunged 35 percent, the most since 1986.
The next key reading in the tug of war between corporate caution and consumer confidence comes on Feb. 5 with the release of the monthly jobs figures. Payrolls are projected to have risen by 190,000 this month after an outsized 292,000 increase in December.
"Job growth is going to slow. The 290,000 and plus that we got in December is not sustainable, particularly given the issues that businesses are facing," said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania.
Still, talk that the U.S. is headed into recession seems misguided, he said. "The U.S. economy ended 2015 with a thud, but it is premature to panic."