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Political Brinkmanship Sends Consumer Confidence Into Tailspin

Largest Drop in Sentiment Since Lehman Collapsed

Oct 8, 2013 2:03 PM   By Jeff Miller
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RAPAPORT... Two of the largest retail industry trade groups, the National Retail Federation (NRF) and the International Council of Shopping Centers (ICSC), had not, as of this past week, identified any clear consumer sentiment trends following the U.S. federal government's shutdown. During an NRF conference call with analysts on October 3, the group revealed that about three-quarters of shoppers  felt no impact from the shutdown. However, the Gallup organization released its first weekly consumer confidence report since the shutdown began and noted the largest weekly drop in sentiment since the Lehman Brothers collapsed in September 2008.

Based on Gallup's Economic Confidence Index, U.S. consumer confidence tumbled 12 points to negative 34 this past week, the second-largest weekly decline since Gallup began tracking economic confidence daily in January 2008.

The organization cited ''fiscal brinkmanship in Washington D.C.'' as the culprit for eroding economic confidence this month as well as in previous political squabbles inside the Capital Beltway.

According to Gallup's, consumer confidence in the economy has  plunged 19 points since the middle of September and is now at its lowest level since December 2011. Gallup concluded that 67 percent of U.S. consumers believed the economy is  getting worse, while 28 percent said it was getting better. This resulted in a net economic outlook score of negative 39 points, down 17 points from the previous week.

Accordingly, Congress' inability to reach a compromise to end the government shutdown and raise the debt ceiling could negatively affect U.S. stock prices, the country's credit rating  and the economic recovery, according to Gallup.

 

Tags: beltway, congress, consumer confidence, economic recovery, Jeff Miller, politics
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