Consumer confidence decreases as many grow concerned about financial prospects

New surveys show consumer confidence sharply declined in January, hitting the lowest level since 2014.

Surveyed consumers say anxiety over a slow labor market and high prices has made them more cautious about spending. The deterioration of confidence is across political party affiliation.

Dale Rogers, professor at the W.P. Carey School of Business at Arizona State University, joined “Arizona Horizon” to discuss decreased consumer confidence.

“…I think it’s also the incredibly fast rate of change we’ve seen in the last year,” Rogers said, “…prices haven’t gone down, we continue to see prices go up…it’s partly that folks are sort of feeling whiplash from the dramatic amount of change they’re seeing…and they’re really uncertain.”

Rogers also emphasized that a connection exists between consumer confidence and consumer spending.

“I think we’ve seen people feel comfortable with spending money, even if they couldn’t really afford to,” Rogers explained, “…up until just the last few months.”

One theory Rogers discussed was the idea of the K-shaped spending, as just recently it had gone up with higher-income individuals, and it’s going down on the low end.

“So you get on an airplane, and the seats in the back aren’t as full as they used to be…but all the seats in the front are totally full,” Rogers said, “…so it’s high-end spending that’s still in much better shape than the low end…and we’re seeing a lot of companies suffer.”