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Economic Report: Consumer confidence slips in January as U.S. economy hits soft patch due to omicron wave

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The numbers: A survey of U.S. consumer confidence fell 1.4 points in January to 113.8, indicating that omicron and high inflation weighed on the minds of Americans early in the new year.

Economists polled by The Wall Street Journal had forecast the index to shrink to 111.7 from a revised 115.2 in December.

During the pandemic, the index has ranged from a high 128.9 after a lull in the pandemic last summer to as low as 85.7 at the onset of the crisis.

Lately the index has drifted lower due to the delta and omicron outbreaks and a surge in inflation.

Big picture: The record wave of omicron cases dented the economy. Millions of people got sick and had to take time off from work. High inflation and scattered shortages of goods and services have also dampened the spirits of consumers.

The good news is, coronavirus cases are falling again, jobs are plentiful and wages are rising. That might explain only a small drop in the index.

Business leaders say there’s plenty of demand for their goods and services and they expect the economy to speed up again. The confidence survey found the percentage of people saying they plan to buy a home, new car or major appliance in the next six months all increased.

Key details: An measure of how consumers feel about the economy right now rose by 3.4 points to 148.2.

Surprisingly, a similar gauge that looks ahead six months slid to 90.8 from 95.4, suggesting some uncertainty about the next stage of the pandemic.

Worries about inflation fell for the second month in a row. In November, concerns about inflation had hit a 13-year high.

Looking ahead: “Both confidence and consumer spending may continue to be challenged by rising prices and the ongoing pandemic,” said Lynne Franco, senior director of economic indicators at the board.

Market reaction: The Dow Jones Industrial Average DJIA, -1.00% and S&P500 SPX, -1.66% sank again in Tuesday trades, a day after a wild swing on Wall Street.

U.S. stock prices have tumbled recently in anticipation that the Federal Reserve would raise interest rates soon.

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