U.S. economic confidence
plunged more in the past weekthan in any week since the collapse of Lehman Brothers on September 15, 2008 — the catalyst for the financial crisis and U.S. recession.
Gallup’s Economic Confidence Index fell 12 points to -34 last week thanks to the government shutdown.
Fiscal brinksmanship has been a major drain on economic confidence in the past. According to Gallup:
Gallup’s Economic Confidence Index fell nine points in late February and early March 2013 as Congress and President Barack Obama failed to reach an agreement to avoid automatic federal spending cuts as part of sequestration. Economic confidence fell eight points during the week ending Feb. 20, 2011, as Congress and the president reached an agreement on the federal budget at the last minute, avoiding a government shutdown.
But Gallup noted that confidence tends to rebound within weeks of fiscal debates, suggesting that this episode (if solved) will not have the same long term drag as, say, the 2008-2009 recession.
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