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A sluggish job market lowers consumer confidence but may also lead to another rate cut from the Federal Reserve by the end of the year.

United States consumer confidence sagged in November as households worried about jobs and their financial situation, likely in part because of the recently ended government shutdown.

The Conference Board said on Tuesday its consumer confidence index dropped to 88.7 this month, from an upwardly revised 95.5 in October, hitting its lowest level since April.

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Economists polled by the Reuters news agency had forecast the index edging down to 93.4 from the previously reported 94.6 in October.

“Consumers’ write-in responses pertaining to factors affecting the economy continued to be led by references to prices and inflation, tariffs and trade, and politics with increased mentions of the federal government shutdown,” said Dana Peterson, chief economist at the Conference Board.

“Mentions of the labour market eased somewhat but still stood out among all other frequent themes not already cited. The overall tone from November write-ins was slightly more negative than in October.”

Consumer confidence remained low among all income brackets. While confidence among those who make less than $15,000 annually ticked up slightly, it still remained the group with the lowest consumer confidence.

The consumer confidence report was released amid a slowing labour market. The September jobs report, released late last week, showed 119,000 jobs were added to the US economy as the unemployment rate ticked up 0.1 of a percentage point to 4.4 percent.

However, there is limited economic data available to fully gauge the sentiment of the US economy because the government shutdown, the longest in US history, hindered federal agencies’ ability to gather the data needed to assess current conditions.

“More worries about what lies ahead … hence, putting purchases for major items on hold,” Jennifer Lee, senior economist at BMO, wrote to Reuters.

The economic data followed dovish comments from policymakers in the past few days that helped cement rate cut expectations.

On Monday, Federal Reserve Governor Christopher Waller said the job market was weak enough to warrant another quarter-point rate cut in December although action beyond that depended on a flood of data that was delayed by the federal government shutdown.

A shopper pictured March 2020 in a Medina, Ohio, grocery store. The survey released Friday showed consumer sentiment at its lowest in three years and near its worst at UM’s second lowest reading since at least 1978 as the ongoing government shutdown by the Republican-controlled congress widens economic concern. File Photo by Aaron Josefczyk/UPI | License Photo

Nov. 7 (UPI) — A new survey by the University of Michigan suggested that Americans may be frightened over the economy as the ongoing U.S. government shutdown reverberates with no end in sight.

The survey released Friday showed consumer sentiment at its lowest in three years and near its worst at UM’s second-lowest reading since at least 1978 as the shutdown sent confidence to near-record lows as economic concerns deepen.

“With the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy,” according to survey Director Joanne Hsu.

The University of Michigan’s monthly Index of Consumer Sentiment posted a more than 6% decline to a little over 50% for the month. It was a 30% decline from about a year ago.

“This month’s decline in sentiment was widespread throughout the population, seen across age, income and political affiliation,” Hsu added.

UM’s well-documented survey showed a gradual decline in consumer confidence over the year starting in February in the wake of tax-like tariffs imposed by U.S. President Donald Trump.

“Across the economy, segments of the population are increasingly dealing with tighter financial conditions,” Elizabeth Renter, senior economist at NerdWallet, told CNBC.

Renter said that is “certainly true for federal workers and people dependent on food assistance from the federal government. But it’s also likely increasingly true for middle income Americans.”