Some people may be happy to see the federal government taking some time off, but the fallout is threatening to cripple many businesses and consumers alike. Now we have yet another private sector reading that shows how much economic confidence is cratering as a result of the latest shenanigans in Washington D.C.
Gallup’s poll comes as the government shutdown is now past the second week, and it showed that Americans’ confidence in the economy continued to erode. In fact, erode may be a nice word, if you look at the annual graph. Gallup showed that its Economic Confidence Index averaged -39, a drop of five points compared to the prior week, and this was after a drop of 12 points during the first week of the government shutdown.
This round of confidence is targeted mostly around the shutdown. This week’s real issue is the debt ceiling cap, and that would be far worse. Imagine how bad confidence will get if the united States starts defaulting on its Treasury bills, notes and bond maturities. That really has not been seen in our lifetimes.
We would caution that Gallup’s reading was the worst it has measured since late November and early December of 2011, which was also around the heels of the prior debt ceiling debate and S&P credit rating downgrade of the United States. Gallup pointed out that the lowest reading in 2011 around the debt ceiling debate was -54, so what is bad now could continue to worsen before hitting the post-recession lows again.