BUSINESS AND ECONOMY -- October 25, 2013 at 11:24 AM ET
The shutdown is over, but consumer confidence hits 10-month low
Consumer confidence in October hit a 10-month low, following the partial government shutdown.
As measured by Thomson Reuters and University of Michigan, September's 77.5 consumer sentiment index decreased to 73.2 this month, the lowest since December 2012, according to Friday morning's final release.
To put that in context, in the five years before the start of the recession in December 2007, the average sentiment index was 89. When times were really bad, in the 18-month period ending in June 2009, the sentiment index averaged 64.2.
Released twice a month, the month's final sentiment index is based on interviews with 500 consumers. This month's preliminary reading had predicted 75.2.
The 16-day government shutdown, a near miss of debt default and credit agency Fitch's warnings about downgrading the U.S.'s sovereign credit rating all contributed to lower consumer confidence. A record number of consumers surveyed indicated that their impression of the economy was tied to the government's troubles.
"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.
Consumer confidence is important to the overall health of the economy because it's used as a gauge of how much Americans will be opening their wallets -- a trend to which economists and business owners alike are particularly attuned as holiday shopping season nears.
In fact, Wall Street places so much weight on this particular Thomson Reuters/University of Michigan index that high-frequency traders often pay to receive it early, as PBS NewsHour reported earlier this year.