A monthly measure of consumer confidence has dropped sharply after a 16-day federal government shutdown dampened the outlook for business and labor conditions.
The Consumer Confidence Index dropped nine points to 71.2 in October on less upbeat assessments of current conditions as well as short-term expectations.
“Consumer confidence deteriorated considerably as the federal government shutdown and debt-ceiling crisis took a particularly large toll on consumer expectations,” said Lynn Franco, director of economic indicators at the Conference Board.
“Similar declines in confidence were experienced during the payroll tax hike earlier this year, the fiscal cliff discussions in late 2012 and the government shutdown in 1995-1996,” Franco said. “However, given the temporary nature of the current resolution, confidence is likely to remain volatile for the next several months.”
The Conference Board, a business research and membership group, bases the Consumer Confidence Index on the results of monthly surveys of U.S.households. Economists closely monitor the index because consumer spending accounts for more than two-thirds of economic activity.
Assessments of current business and labor conditions pulled down the present situation component of the index nearly three points to 70.7 in October.
The share of consumers responding to the survey upon which the October index was based who characterized business conditions as “good” dropped nearly two points to 19 percent. The proportion of those who called conditions “bad” also dropped, though, almost a point to 23 percent.
The share of consumers who called jobs “plentiful” edged down a tenth of a point to 11.3 percent. The proportion of those who said jobs are “hard to get” increased more than two points to 35.8 percent.
A less optimistic outlook for the next six months pulled down the expectations component of the index more than 13 points to 71.5.
The proportion of consumers who expect business conditions to improve dropped nearly five points to 16 percent, while the share of those anticipating worsening conditions jumped more than seven points to 17.5 percent.
The proportion of consumers who expect more jobs to become available in the months ahead retreated eight-tenths of a point to 15.3 percent.
Meanwhile, 22.7 percent of consumers anticipate fewer job openings, up nearly four points.
The share of consumers who expect their incomes to increase rose seven-tenths of a point to 15.8 percent. But the proportion of those who anticipate decreased incomes grew more — 1.5 points to 15.4 percent.