Though not as bad as the latest Gallup survey on the American mood noted here the other day, the Reuters/University of Michigan consumer sentiment index fell to its lowest level since January, down from 77.5 in September to 75.2 in the first of two readings for October.
The fiscal mess in Washington that now includes a government shutdown along with a looming debt ceiling crisis were the the proximate causes of the most recent decline, as similar events in mid-2011 and late-2012 also led to sagging confidence as shown below.
Surprisingly, the current conditions index edged up, from 92.6 in September to 92.8 in October, but the expectations component fell from 67.8 to 63.9, its lowest level of the year.
The 12-month outlook continued its recent free-fall, tumbling another 15 points to just 71, its lowest level since December 2011 just after the last debt ceiling crisis. This gauge of Americans’ long-term outlook was over 100 as recently as a few months ago.
Survey director Richard Curtin noted:
Consumer confidence posted a surprisingly small decline in early October despite widespread awareness of the government shutdown. The muted response may be due to consumers giving progressively less credence to the economic scare tactics that have framed the debates over the past few years
To be sure, this can quickly change if the impasse continues.