U.S. consumer sentiment dropped in October to its lowest level since the end of last year as consumers worried Congressional dysfunction and the resulting partial federal government shutdown would hurt growth, a survey released on Friday showed.
The Thomson Reuters University of Michigan’s final reading on the overall index on consumer sentiment fell to 73.2 in October from 77.5 in September, which is the lowest final reading since December 2012.
The October measurement was lower than both economists’ forecast of 75.0 in a Reuters poll and the mid-month preliminary reading of 75.2, as well.
The 16-day federal government shut down in the first half of October — which occurred when President Barack Obama refused to delay the ObamaCare individual mandate as a condition of funding the government — is being cited as one of the culprits already.
While a last-minute agreement averted that outcome by raising the debt ceiling until early next year, rating agency Fitch warned it could still cut the U.S. sovereign credit rating because of the political dysfunction and unsustainable debt.
“When asked to describe in their own words what they had heard about recent economic developments, the number of consumers that negatively mentioned the federal government in October was the highest in the more than half-century history of the surveys,” survey director Richard Curtin said in a statement.
Other gauges also hit multi-month lows. The index of consumer expectations was measured at 62.5, which is its lowest measurement since November of 2011, and the index of current conditions, at 89.9, is at its lowest since April.
The media is citing the impasse as a likely hindrance of economic growth in the quarter and the fact that Standard & Poor’s estimated that the shutdown cost the economy $24 billion.
The one-year inflation expectation fell to 3.0 percent from 3.3 percent, while the 5-to-10-year inflation outlook edged down to 2.8 percent from 3.0 percent.
