Consumer confidence at lowest level since January after shutdown

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Shoppers ride an escalator at an Old Navy store in Santa Monica. Consumer confidence fell this month to its lowest level since January, according to a University of Michigan/Thompson Reuters index.

Shoppers ride an escalator at an Old Navy store in Santa Monica. Consumer confidence fell this month to its lowest level since January, according to a University of Michigan/Thompson Reuters index.

Consumer confidence dropped this month to its lowest level since January after the partial federal government shutdown, though the decline wasn’t as bad as some had forecast, according to new data released Friday.

The preliminary October consumer sentiment index from the University of Michigan and Thompson Reuters fell to 75.2 from 77.5 the previous month. Economists surveyed by Bloomberg News had projected the October figure would drop to 75.

It was the third straight monthly decrease since the index reached a six-year high of 85.1 in July. The lowest reading of the year was 73.8 in January.

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But given the government shutdown, which began Oct. 1, and fears of a default if the debt limit is not raised by Thursday, October’s decline wasn’t as steep as it might have been.

That could reflect the belief that Washington’s fiscal impasse would be resolved quickly.

“Consumer confidence posted a surprisingly small decline in early October despite widespread awareness of the government shutdown,” survey director Richard Curtin said, according to Reuters.

“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,” he said.

The government shutdown has prevented the release of almost all federal economic data, leaving private reports like the University of Michigan/Reuters consumer sentiment index the only gauges on the state of the recovery.

Courtesy of Los Angeles Times

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