America is suffering from a government shutdown hangover. Making it even worse, there wasn't even a party preceding the pain. And there's no immediate relief in sight.
You can see it in the latest temperature-taking of consumers and voters.
The Conference Board's Consumer Confidence Index dropped sharply in the wake of the 16-day partial government shutdown. The Index now stands at 71.2, down from 80.2 in September. (A level around 100 is considered normal.) Since then, there's fresh evidence that the political infighting is reflecting badly on the entire Washington, D.C., political establishment.
An NBC News/Wall Street Journal poll conducted from Oct. 25-28 found President Barack Obama's approval rating has dropped to an all-time low. Only 42 percent of Americans polled approve of the president's performance. At the same time, there have been a number of other polls being released showing most Americans blaming the GOP for the shutdown. While Americans appear to be disgusted with the whole bunch, they appear to still be getting out of bed in the morning and going to work, keeping up the pace of their spending. So far.
Link to the economy
Often, the political process in Washington is seen as largely irrelevant to Americans' pocketbook issues. But this time seems worse, says economist Joel Naroff with Naroff Economic Advisors. "The problem as I put it is that what goes on in Washington doesn't stay in Washington. It's one thing that the chaos is political. It is another thing that the political chaos has economic consequences," says Naroff. That's what makes this stalemate different, he says.
So, we know that attitudes have been affected by the political logjam. We have not seen evidence that behavior, such as spending or hiring, has taken a dramatic wrong turn.
Heading into the shutdown, the Labor Department's household survey of employment, used to calculate the unemployment rate, shows only an average of 81,000 jobs have been created over the past three months. The delayed October jobs report is due Nov. 8.
With a set of budget-related deadlines looming through early February, political leaders have a series of opportunities to either fail or succeed.
On the other hand, the stock market seems to continue to register new highs on a daily basis, due in part to the continued commitment by the Federal Reserve for asset purchases. Also, the Institute for Supply Management's manufacturing index ticked up very slightly in October. The report from the purchasing managers' trade group noted "mixed responses on whether the government shutdown and potential default have had any effect on October's results."
Briefing.com chief economist Jeffrey Rosen says "uncertainty is a hot topic right now." But he's not seeing anything to suggest the economy is tanking when looking at new unemployment claims. "The lack of a large increase initial claims data during the October shutdown suggests that the private sector, in the aggregate, will not be negatively impacted by much if another government shutdown occurs. Not enough people were temporarily laid off to affect savings rates," says Rosen.
Congressional and Senate budget conferees are facing a mid-December deadline, while the government is funded only through Jan. 15 and the debt ceiling is extended to Feb. 7. "The longer this goes on, the political problems become real problems," Naroff says.
"It's a hangover and you've got no aspirin," says Naroff.
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