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Consumer confidence tumbles as government shutdown sows pessimism

October 25, 2013|By Jim Puzzanghera
  • A woman browses previously owned children's games for sale during the L.A. Kids Consignment Sale in Burbank.
A woman browses previously owned children's games for sale during… (Patrick T. Fallon / Bloomberg )

WASHINGTON -- A leading barometer of consumer confidence tumbled this month to its lowest level this year as the partial federal government shutdown led to fears the economic recovery would slow down.

The consumer sentiment index from the University of Michigan and Thomson Reuters fell to 73.2 from 77.5 in September, a steeper drop than economists had forecast. The October figure, released Friday, was the lowest since December, when consumers were concerned about the looming fiscal cliff of tax hikes and budget cuts.

Richard Curtin, the survey's chief economist, said the continual partisan standoffs in Washington keep snuffing out consumer optimism about the economy.

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He noted this was the third straight year that "a revival of the D.C. follies" has set back consumer confidence.

"It is hard to imagine how economic uncertainty will decline in the next few months since nothing was settled, only postponed," Curtin said of the deal that ended the 16-day shutdown. "Nonetheless, the battered consumer will heave a sigh of relief during the brief stoppage between rounds in the D.C. fight."

Congress and the White House agreed to a temporary federal spending bill that lasts until Jan. 15 and to extend the debt limit until Feb. 7.

The fiscal impasse in Washington pushed the survey's expectation index, which gauges consumers' views of the direction of the economy over the next year, to its lowest level since late 2011.


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