Americans in October were the most pessimistic about the nation’s economic prospects in almost two years as concern mounted that continued political gridlock will hurt the expansion.
The monthly Bloomberg Consumer Comfort Index expectations gauge plunged to minus 31, the lowest level since November 2011, from minus 9 in September, a report showed today. The share of people projecting the economy will worsen jumped by the most since the collapse of Lehman Brothers Holdings Inc. five years ago. The weekly measure of current conditions fell to minus 34.1 in the period ended Oct. 13, the weakest since March.
The legislation passed by Congress last night to raise the debt ceiling and fund the government into 2014 may be setting the stage for another round of confrontations early next year. The fiscal impasse in Washington has spared few as today’s report showed consumers across almost all demographic groups grew increasingly distressed.
“The government shutdown has resulted in a startling decline in consumer sentiment and likely business sentiment that will result in a much slower pace of consumption and capital expenditures in the current quarter,” said Joseph Brusuelas, a senior economist for Bloomberg LP in New York. “Should lawmakers kick a decision into early 2014, it is likely that consumer sentiment will keep deteriorating.”
Other reports today showed more Americans than forecast filed applications for unemployment benefits last week, and factories in the Philadelphia region expanded more than projected in October.
Jobless claims decreased by 15,000 to 358,000 in the week ended Oct. 12 from a revised 373,000 in the prior period, according to Labor Department figures. California continued to work through a backlog, A Labor Department spokesman said, indicating it will take time to gauge the impact of the federal shutdown.
The Federal Reserve Bank of Philadelphia’s general economic index fell to 19.8 this month from a more than two-year high of 22.3 in September. Readings greater than zero signal growth in the area, which covers eastern Pennsylvania, southern New Jersey and Delaware.
Stocks fell, after the Standard & Poor’s 500 Index came within four points of a record, as investors assessed the effects of the budget standoff and International Business Machines Corp. and Goldman Sachs Group Inc. tumbled amid declining revenue. The S&P 500 declined 0.1% to 1,719.45 at 10:21 a.m. in New York.