News

Consumer confidence slides after government shutdown

Consumer confidence slides after government shutdown

CONSUMER CONFIDENCE: Consumer sentiment has dropped to its lowest level this year. Photo: Reuters

NEW YORK (Reuters) – U.S. consumer sentiment dropped in October to its lowest level since the end of last year as consumers worried congressional dysfunction and the resulting partial shutdown of the federal government would hurt growth, a survey released on Friday showed.

The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment fell to 73.2 in October from 77.5 in September and was the lowest final reading since December 2012.

The October figure was lower than both the 75.0 forecast by economists in a Reuters poll and the mid-month preliminary reading of 75.2.

“Not too pretty but not a disaster after all,” said Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York. Fiscal fights in Congress “took their toll,” with a drumbeat of negative news eroding sentiment.

The federal government shut down for 16 days in the first half of October as Republicans in Congress sought to undermine President Barack Obama’s signature health care law as a condition of funding the government.

The government also came close to breaching its borrowing limit, which compounded the crisis and could have pushed the country closer to a historic debt default.

While a last-minute agreement averted that outcome by raising the debt ceiling until early next year, rating agency Fitch warned it could still cut the U.S. sovereign credit rating because of the political brinkmanship.

“When asked to describe in their own words what they had heard about recent economic developments, the number of consumers that negatively mentioned the federal government in October was the highest in the more than half-century history of the surveys,” survey director Richard Curtin said in a statement.

Other gauges also hit multi-month lows. The index of consumer expectations, at 62.5, hit its lowest since November 2011, and the index of current conditions, at 89.9, hit its lowest since April.

The debt impasse likely affected economic growth in the quarter, with Standard & Poor’s estimating the shutdown took $24 billion out of the world’s biggest economy.

The one-year inflation expectation fell to 3.0 percent from 3.3 percent while the five-to-10-year inflation outlook edged down to 2.8 percent from 3.0 percent.

The sliding consumer confidence could in turn affect holiday spending – especially as the Congressional deal is only a temporary fix, which could see renewed fiscal debates toward year-end.

“I really hope the holiday season will be okay,” Shulyatyeva said. “This is really bad timing.”

Latest Headlines

today in Local

Maine Gets Sewage Funds, But Says It Needs More

GENERIC COUNTERFEIT MONEY

Maine officials say the $29.7 million they're receiving for wastewater treatment upgrades in seven facilities is a small portion of the more than $1 billion needed for similar projects over the next 20 years.

today in Local

Panel Makes Recommendations To Stop Domestic Abuse

generic-news

Creating a state database of concealed handgun permits and encouraging health care providers to screen patients regularly for physical abuse are among dozens of recommendations from a panel of Maine officials and law enforcement members who examined recent domestic violence homicides.

today in Local

University Of Maine Researchers Get Project Money

GENERIC COUNTERFEIT MONEY

Three University of Maine research scientists will receive grants from the National Oceanic and Atmospheric Administration for projects related to the fishing industry.

today in Local

Maine Man Says In Lawsuit Petco Rat Made Him Sick

GENERIC COURT LARGE

A Maine man who says he developed a serious disease after getting bit by a rat he bought at Petco has sued the pet supply retailer.

today in Local

Wilkerson, Close to receives degrees from Bates

college grad

LEWISTON, Maine (AP) - Pulitzer Prize winning author Isabel Alexis Wilkerson and Oscar-nominated actor Glenn Close are among four people scheduled to receive honorary degrees at the Bates College commencement.