Government Shutdown is Further Eroding Economic Confidence

The latest Gallup Economic Confidence Index shows that the government shutdown has caused confidence in the US economy to drop sharply.  Gallup computes the Index by combining responses to two questions asking respondents to rate economic conditions in the country today, and whether they think economic conditions in the country as a whole are getting better or getting worse. The Index is computed by adding the percentage of Americans rating current economic conditions (("excellent" + "good") minus "poor") to the percentage saying the economy is ("getting better" minus "getting worse"), and then dividing that sum by 2. The Index has a theoretical maximum value of +100 and a theoretical minimum value of -100. Values above zero indicate that more Americans have a positive than a negative view of the economy; values below zero indicate net-negative views, and zero indicates that positive and negative views are equal.

The economic confidence score of -34 is the lowest since December 2011, and has decreased sharply from -13 in August, to -19 at the end of September, and -34 in the first few days of October.

Gallup Economic Confidence Index, Sept. 3-Oct. 3, 2013

"How much lower economic confidence might fall over the days and weeks ahead depends on what the Congress ends up doing in regard to both the current government shutdown and the looming debt ceiling deadline on Oct. 17. One glimmer of more positive news is the fact that after a similar plummet in confidence during the August 2011 debt ceiling crisis, confidence regained its previous footing within several months."

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Frederique Laubepin

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