U.S. consumer sentiment dropped in October to its lowest level since the end of last year as consumers worried Congressional dysfunction and the resulting partial federal government shutdown would hurt growth, a survey released on Friday showed.
Continue Reading Below
The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment fell to 73.2 in October from 77.5 in September and was the lowest final reading since December 2012.
The October figure was lower than both the 75.0 forecast by economists in a Reuters poll and the mid-month preliminary reading of 75.2.
The federal government shut down for 16 days in the first half of October as Congressional Republicans sought to undermine President Barack Obama's signature health care law as a condition of funding the government.
The government also came close to breaching its borrowing limit, which compounded the crisis and could have pushed the country closer to a historic debt default.
While a last-minute agreement averted that outcome by raising the debt ceiling until early next year, rating agency Fitch warned it could still cut the U.S. sovereign credit rating because of the political brinkmanship.
"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," survey director Richard Curtin said in a statement.
Other gauges also hit multi-month lows. The index of consumer expectations, at 62.5, hit its lowest since November 2011, and the index of current conditions, at 89.9, hit its lowest since April.
The Congressional impasse likely affected growth in the quarter, with Standard & Poor's estimating the shutdown took $24 billion out of the world's biggest economy.
The one-year inflation expectation fell to 3.0 percent from 3.3 percent while the five-to-10-year inflation outlook edged down to 2.8 percent from 3.0 percent.