US consumer confidence falls sharply in October
Consumer confidence in economic activity fell to a six-month low in October, as the 16-day government shutdown has left many Americans concerned about the country’s future outlook. “Consumer confidence deteriorated considerably as the federal government shutdown and debt-ceiling crisis took a particularly large toll on consumers’ expectations,” said Lynn Franco of The Conference Board.
The highly followed Consumer Confidence Index is released on a monthly basis by The Conference Board, and is based on a probability-design random sample survey.
The index fell ten points to 71.2, having declined three of the last four months. Declining consumer confidence is a result of slower job growth, meager wage hikes and ongoing uncertainty about government finances. Americans are concerned a second round of confrontations in Congress could emerge before the budget limit increase expires on February 7, 2014. Republicans are seeking to undermine President Barrack Obama’s Affordable Care Act, which is currently under fire due to technical glitches. Technical difficulties are making it more difficult for Americans to purchase federally-mandated health insurance.
Consumer expectations and future outlook declined sharply in October. Only 16 percent of Americans expect business conditions to improve over the next six months, compared to 20.6 percent who said so last month. Those expecting business conditions to deteriorate increased from 10.3 percent to 17.5 percent.
Consumers’ outlook on the labour market also worsened. In total, 15.3 percent of consumers expect to see more jobs in the months ahead, down from 16.1 percent in September. Those anticipating fewer jobs increased from 19.1 percent to 22.7 percent. Consumers expecting their wages to decline offset those expecting wage hikes. In total, 15.4 percent of consumers expect wages to decrease, up from 13.9 percent the previous month.
Last week Reuters and The University of Michigan said consumer confidence fell to its lowest level in 2013. The monthly report revealed consumer expectations fell to their lowest level since November 2011, mirroring The Conference Board’s findings. The impacts of the government shutdown will linger into the fourth quarter, and could impact business activity leading up to the holiday season.
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