The Gallup consumer confidence poll has started working its way back up from the lowest point of the year as a result of the partial government shutdown and debt ceiling debacle. According to Standard & Poors as of Oct 16th, (the Shutdown) “to date has taken $24 billion out of the economy,” equaling $1.5 billion dollars a day and “shaved at least 0.6 percent off annualized fourth-quarter 2013 GDP growth.” The glimmer of hope was that the rebound would follow in the same quarter and therefore minimize the footprint of the event into Q4. The preliminary 12% drop in consumer confidence was the second largest ever, behind the bankruptcy of Lehman Brothers in 2008. However before the resolution was finally reached between the White House and Congress, the index fell another 5%, which would have amounted the largest single downswing in consumer confidence ever.
Positive signs are starting to indicate that just as the whole incident was artificially manufactured, the fear and underlying drop in confidence should be easily overcome. Consumer spending was strong this weekend heading into the holiday shopping season and the Bureau of Labor Statistics is indicating that there were no major shifts in the employment numbers during the shutdown. With such strong indicators that these events have significant impact on the US economy, as well as the reactions in markets around the world, let us all hope that pragmatism and common sense will prevent a repeat of these events in the few short months before the next debt ceiling deadline.
Charts courtesy of Gallup.com
