Consumer Confidence Tanked During Debt Ceiling Debacle

Before you go, we thought you'd like these...
Before you go close icon
Young businessman checking his wallet
Alamy
The ugly fight in Washington that shut down the government and nearly failed to raise the debt limit took a serious toll on consumer confidence.

The Conference Board's monthly Consumer Confidence Index was released Tuesday, and it showed that people's confidence in the U.S. economy dipped sharply in October. In one month, the confidence index fell from 80.2 to 71.2, and the nonprofit that publishes the survey pointed the finger at the budget crisis.

"Consumer confidence deteriorated considerably as the federal government shutdown and debt-ceiling crisis took a particularly large toll on consumers' expectations," wrote Lynn Franco, Director of Economic Indicators at The Conference Board. Franco went on to note that similar dips have been observed last year during the "fiscal cliff" debate and during the last government shutdown in the mid-1990s.

The Conference Board isn't alone in its assessment that the shutdown hurt consumer confidence: Last week's Thomson Reuters/University of Michigan consumer confidence survey found that confidence in the economy had reached its lowest ebb since December 2012.

%VIRTUAL-article-sponsoredlinks%Consumer confidence is a closely watched economic indicator, and the troublesome reports come just a month before the official kick-off of the holiday shopping season. And that could spell trouble for the retail industry and the economy as a whole.

"With the holiday shopping season around the corner, consumers have been shaken by all the political turmoil in Washington," wrote IHS Global Insights economist Chris Christopher in an email. "Looking ahead, we expect consumer confidence to gain traction in the upcoming months; however, confidence falls faster than it rises."

There is a potential silver lining for consumers, though -- as Christopher points out, retailers will be discounting heavily to convince shoppers to shake off their worries and get to the mall.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.
Read Full Story

Markets

S&P 500 2,384.20 -4.57 -0.19%
DJIA 20,940.51 -40.82 -0.19%
NASDAQ 6,047.61 -1.33 -0.02%
DAX 12,438.01 -5.78 -0.05%
NIKKEI 225 19,196.74 -55.13 -0.29%
HANG SENG 24,615.13 -83.35 -0.34%
USD (per EUR) 1.09 0.00 0.30%
USD (per CHF) 0.99 0.00 0.05%
JPY (per USD) 111.52 0.30 0.27%
GBP (per USD) 1.29 0.01 0.44%

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners

Man Felt Something Inside His Nose - But What Doctors Pull Out Leaves Everyone Stunned Man Felt Something Inside His Nose - But What Doctors Pull Out Leaves Everyone Stunned
20 Folks Recall Shocking Interview Moments That Made Them NOT Want the Job 20 Folks Recall Shocking Interview Moments That Made Them NOT Want the Job
Woman Feels Strange Lumps Under Her Dog's Fur - Then Realizes What Happened In Her Own Woman Feels Strange Lumps Under Her Dog's Fur - Then Realizes What Happened In Her Own