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Illustration: Sarah Grillo/Axios

Measures of sentiment, like January's consumer confidence survey, continue to show negative expectations for the economy, even as actual economic trackers, like the monthly U.S. jobs report, keep coming in strong.

Between the lines: Economists say when that happens it usually signals a downturn is coming.

  • Small business owners' confidence in the economy fell for the fourth straight month in December, while their outlook on business conditions sank to the lowest since late 2016, according to the latest release from the National Federation of Independent Business.
  • Consumers' future expectations for the economy posted the largest three-month decline since late 2011, according to the Conference Board Consumer Confidence Index.
  • The Fed's latest survey of senior loan officers found that banks expected tighter standards, weaker demand, and worse performance for business and household loans this year.

Why it matters: "People are getting cautious and that can be a self-fulfilling prophecy at times," Charles Schwab's chief fixed income strategist Kathy Jones tells Axios.

Still, those worries have not yet shown up on key readings of the economy.

The government shutdown has delayed more recent readings of consumer spending, but economists don't expect downbeat sentiment to translate into tighter pocketbooks just yet.

  • "The consumer is showing no signs of pulling back on activity and is continuing to spend on discretionary items," Michelle Meyer, senior U.S. economist at Bank of America Merrill Lynch, wrote in a note to clients.

The bottom line: Most reports are backward looking, so the effects of a downbeat consumer could still be coming.

  • There isn't a fixed amount of lag time between pessimism in sentiment and softening economic data, but Schwab's Jones estimates it's likely a matter of "three to six months."
  • Conversely, there could be a rebound in sentiment, given the Fed's softening of its interest rate hike path and a positive developments in trade negotiations between the U.S. and China.

Be smart: We saw this kind of data divergence in 2016. There was not a recession, but economic growth did slow.

Go deeper

Updated 38 mins ago - World

Mexican President López Obrador tests positive for coronavirus

Mexico's President Andrés Manuel López Obrador during a press conference at National Palace in Mexico City, Mexico, on Wednesday. Photo: Ismael Rosas/Eyepix Group/Barcroft Media via Getty Images

Mexican President Andrés Manuel López Obrador announced Sunday evening that he's tested positive for COVID-19.

Driving the news: López Obrador tweeted that he has mild symptoms and is receiving medical treatment. "As always, I am optimistic," he added. "We will all move forward."

54 mins ago - Politics & Policy

Sarah Huckabee Sanders to run for governor of Arkansas

Sarah Huckabee Sanders at FOX News' studios in New York City in 2019. Photo: Steven Ferdman/Getty Images

Former White House press secretary Sarah Huckabee Sanders will announce Monday that she's running for governor of Arkansas.

The big picture: Sanders was touted as a contender after it was announced she was leaving the Trump administration in June 2019. Then-President Trump tweeted he hoped she would run for governor, adding "she would be fantastic." Sanders is "seen as leader in the polls" in the Republican state, notes the Washington Post's Josh Dawsey, who first reported the news.

Coronavirus has inflamed global inequality

Illustration: Aïda Amer/Axios

History will likely remember the pandemic as the "first time since records began that inequality rose in virtually every country on earth at the same time." That's the verdict from Oxfam's inequality report covering the year 2020 — a terrible year that hit the poorest, hardest across the planet.

Why it matters: The world's poorest were already in a race against time, facing down an existential risk in the form of global climate change. The coronavirus pandemic could set global poverty reduction back as much as a full decade, according to the World Bank.