Confidence falls, consumers view government as impediment to growth

Consumer confidence declined in October as consumers became convinced that the national government shutdown as well as other restrictions on federal spending would slow the overall pace of economic growth over the next several months, according to the Thomson Reuters/University of Michigan Surveys of Consumers.

Conducted by the U-M Institute for Social Research since 1946, the surveys monitor consumer attitudes and expectations.

Overall, the Consumer Sentiment Index fell to its lowest level since the fiscal cliff crisis in late 2012, and the Consumer Expectations Index reached its lowest level since late 2011.

Perhaps the most significant finding, according to U-M economist Richard Curtin, is that consumers have increasingly moved toward the view that government has become the primary obstacle to more robust . 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.

Personal financial prospects weaken

Just 25 percent of all households expected their finances to improve in the year ahead, with half of all families expecting no income increase. Inflation-adjusted income prospects improved slightly from last month, largely due to a decline in the expected inflation rate. Offsetting heightened concerns about prospects for wages and jobs, consumers reported gains in their household wealth, including rising values of stocks and homes.

Slow job growth expected

The near-term outlook for the national economy suffered most from the D.C. stalemate, with unfavorable economic conditions expected by 61 percent in October, up from 50 percent in September. A slowing pace of economic growth meant that consumers anticipated fewer new jobs to be created, reversing the gains recorded a year ago. Indeed, in last October's survey consumers held the most optimistic expectations for so far in this expansion. In the latest survey, expected the national unemployment rate to edge upward during the year ahead.

Consumer Sentiment Index

The Sentiment Index was 73.2 in October 2013, down from 77.5 in September and last October's 82.6. Most of the weakness was in the Expectations Index, which fell to 62.5 in October from 67.8 in September and last year's 79. The Current Conditions Index was 89.9 in October, down from 92.6 in September, but just above last October's 88.1.


Explore further

Policy uncertainty dims consumer confidence in September

More information: Chart at bit.ly/1c3JZOn
Table at bit.ly/Hlpwdn
Citation: Confidence falls, consumers view government as impediment to growth (2013, October 28) retrieved 22 October 2019 from https://phys.org/news/2013-10-confidence-falls-consumers-view-impediment.html
This document is subject to copyright. Apart from any fair dealing for the purpose of private study or research, no part may be reproduced without the written permission. The content is provided for information purposes only.
0 shares

Feedback to editors

User comments

Oct 28, 2013
But Obama is not at fault. Just because every promise he made was a lie.
Under the democrats and Obama during the last 8 years
Gas price up
Violent crime Up
Unemployment up
Welfare Up
food prices up

How about we call the Democrats the Poverty Party.

Oct 28, 2013
It's sort of freaky how no one questions the viability of the 'infinite economic growth' doctrine when looking at the reality of finite (and in some cases already dwindeling) resources.

Unless someone hits upon the idea that a sustainable economy is the only one that is viable long-term this will end badly.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more