Consumer Confidence Measures Plunge Post-Shutdown

Just as nearly everyone expected, the federal government shutdown and debt-ceiling brinkmanship undercut consumer confidence. The Thomson Reuters/University of Michigan Consumer Sentiment Index fell more than four points or 5.5% to 73.2 in the final October reading. This was down from 77.5 in September and 82.6 a year ago. The October reading was the lowest since the fiscal cliff crisis in late 2012. The Expectations Index fell to 62.5, its lowest level since late 2011 and a clear sign that consumers expect slow growth ahead. It stood at 79 a year ago.

The survey clearly indicated that consumers see the federal government as the problem. “Perhaps the most significant finding is that consumers have increasingly moved toward the view that the government has become the primary obstacle to more robust economic growth,” the release stated.

Another worrisome finding in the survey was that consumers now expect jobs growth to slow. The percentage of respondents foreseeing unfavorable economic conditions jumped to 61% from 50% in September.

The University of Michigan indexes weren’t the only consumer confidence measures that took a big hit. The Gallup Economic Confidence Index had its single largest weekly drop in the first week of October since the Lehman Brothers collapse in September 2008. Its index is at its lowest level since after the debt ceiling fight in 2011.