Americans are getting used to the fiscal brinkmanship that seemingly occurs every few months courtesy of the dysfunctional Congress.
In fact, all of this talk about a government shutdown seems to be having no impact on sentiment, which is good news for the economy.
“The Rasmussen Consumer Index, which measures consumer confidence on a daily basis, gained a point on Tuesday to reach 103.0,” said wrote Rasmussen Reports today. “Consumer confidence is up half a point from a week ago and seven points from month ago, but is unchanged from three months ago.”
“US fiscal crises in recent years have been followed by political agreements in the wake of politicians’ bluff and bluster,” wrote UBS’s Maury Harris in a note published on Friday. “Surely, this memory has limited the public’s initial response to the latest round of fiscal wrangling. The daily Rasmussen confidence measure and the weekly Bloomberg Consumer Comfort Index have not shown signs of buckling yet in late September as the fiscal crisis started to dominate headlines. The implicit 78.5 Thomson Reuters/University of Michigan consumer sentiment reading for the late September polling period was up a tad from the 76.8 reported for the early September period, albeit still under the 82.1 recorded for all of August and this year’s peak of 85.1 in July. (Note: The latest month’s polling ended after Sept. 24.) In past fiscal crises in 2011 and 2012, all of the major indices eventually substantially weakened.”
In terms of the government shutdown, duration will obviously be the key variable. Specifically, the longer the shutdown, the worse it’ll likely be to the consumer.
“However, there is potential for a major blow to public confidence if the fiscal fracas continues past early October,” warned Harris.