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Shutdown, Debt Debate Rocked Consumer Confidence
U.S. consumer confidence was shaken significantly by the U.S. government shutdown and debt-ceiling negotiations. The index fell to 71.2 from a revised 80.2 last month; the decline was the largest since August 2011.
Confidence among U.S. consumers declined in October by the most since August 2011 as the budget impasse and debt-ceiling negotiations in Washington took a toll on outlooks.
The Conference Board’s index slumped to 71.2 from a revised 80.2 last month, the New York-based private research group said today. The median forecast in a Bloomberg survey of economists called for a decrease this month to 75. The October reading was the weakest in six months.
The partial shutdown of federal agencies for half the month pushed consumer expectations to a seven-month low as the economy shows signs of cooling. Limited employment and wage gains, along with the prospect of another budget battle early next year, raise the risk of restrained holiday sales.
“We had lost a little momentum going into the shutdown,” Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, said before the report. “It could be a lackluster holiday retail season, and I think we’re going to continue plodding along here.”
Estimates of consumer sentiment ranged from 70 to 82 among the 74 economists surveyed by Bloomberg after a previously reported September reading of 79.7. The Conference Board’s index averaged 53.7 in the recession that ended in June 2009.
Other reports today showed home prices increased more than forecast in August and retail sales excluding motor vehicles rose in September.
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