By Ruth Mantell, MarketWatch
WASHINGTON (MarketWatch) — The bottom fell out of consumers’ economic expectations this month, plunging a gauge of their confidence to the lowest level in half a year, as Washington’s partisan bickering shut down the government and worried global investors, according to data released Tuesday.
The Conference Board, a research association, reported that its gauge of consumer confidence fell to 71.2 in October from 80.2 in September. Economists polled by MarketWatch had expected an October reading of 75, compared with an original estimate of 79.7 for September.
“Consumer confidence deteriorated considerably as the federal government shutdown and debt-ceiling crisis took a particularly large toll on consumers’ expectations,” said Lynn Franco, director of economic indicators at The Conference Board. “Given the temporary nature of the current resolution, confidence is likely to remain volatile for the next several months.”
The Conference Board’s gauge of consumer expectations dropped to 71.5 in October from 84.7 in September, while a barometer of their views on the present situation fell to 70.7 from 73.5.
Tuesday’s reading on confidence echoes other recent reports showing that the showdown among U.S. lawmakers hit consumers. A separate reading on consumer sentiment recently fell to the lowest level in almost a year.
As the holiday season approaches, the key question is: Will consumers spend?
Economists are concerned that continuing and heated fiscal battles in Washington could hurt consumer spending, which is the backbone of the economy. Elsewhere Tuesday, the government reported that U.S. retail sales fell in September for the first time in six months. However, that drop was led by a possibly temporary drop in auto purchases.
U.S. stocks SPX +0.30% were stronger on Tuesday, though they were off the highest levels of the day. See Market Snapshot.
Ruth Mantell is a MarketWatch reporter based in Washington. Follow her on Twitter @RuthMantell.
