U.S. consumer confidence fell in October as concern grew that the partial government shutdown and political fight over the nation's borrowing limit would slow growth.
U.S. consumer confidence fell in October as concern grew that the partial government shutdown and political fight over the nation’s borrowing limit would slow growth.
The University of Michigan said Friday that its index of consumer sentiment fell to 73.2 from 77.5 in September. The index has fallen for three straight months after reaching a six-year high of 85.1 in July.
A measure of Americans’ expectations for future growth fell to its lowest level since late 2011, pulling down the overall index.
Falling confidence can cause Americans to spend less, which would slow the economy, though the relationship isn’t automatic.
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Lower confidence “going into the holiday season could somewhat limit consumers’ plans to splurge,” said Yelena Shulyatyeva, an economist at BNP Paribas.
Americans made more negative references to the federal government’s impact on the economy this month than at any time in the roughly 50-year history of the survey.
“Consumers have increasingly moved toward the view that the government has become the primary obstacle to more robust economic growth,” the report said.
Richard Curtin, director of the survey, said that it was the third time in the past three years that negative comments about the government had reached a record level. The previous two occurred when Congress and the White House fought over raising the borrowing limit in August 2011 and when a package of tax increases and spending cuts, known as the “fiscal cliff,” loomed at the beginning of this year.
“After each repeated advance in optimism during the past three years, a revival of the DC follies promptly reversed the gain,” Curtin said.