The government shutdown has taken a toll on consumer spending, according to Goldman Sachs equity analysts led by Lindsay Drucker Mann.
Goldman surveyed 1,000 consumers to ask how the fiscal crisis in Washington, D.C. was affecting their spending patterns.
“When asked ‘has the fiscal policy impasse in Congress caused you to scale back or eliminate spending?’ 40% of 1,000 consumers surveyed responded it had, with 28% indicating ‘a little’ and 12% ‘considerably’,” writes Mann in a note to clients. “Of note, 47% of respondents with household income <$35k indicated they felt impacted, compared to only 32% of respondents earning >$100K per household.”
Two weeks of government shutdown have helped erase two years of consumer confidence gains, as high-frequency measures of sentiment like Gallup’s daily Economic Confidence Index have plummeted since the beginning of October.
Yesterday, Goldman published the results of a separate, quarterly survey of 2,000 consumers. The report said the disparity in sentiment toward the economy between low- and high-income households in the third quarter was the largest in the history of the survey, which began 2005.
Spending patterns in Q3 reflected the widening divergence in sentiment — high-income houses spent more, while low-income households pared back.