A Gallup report released Friday showed American’s economic confidence dropped sharply after only three days under the partial government shutdown that began after Congress failed to compromise on a continuing resolution before midnight Oct. 1.
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Gallup’s Economic Confidence Index tracks data in three-day rolling averages, which between Sept. 27-29 was already at -20 and fell 14 points to -34 between Oct. 1-3, not even a full week into a partial government shutdown that could shed more functions the longer it lasts.
This week’s shutdown average is the lowest economic confidence rating Gallup has tracked since December 2011, just four months after Congress’s last round of back-to-back continuing resolution and debt ceiling fights that resulted in a downgrade of the U.S. credit rating by the S&P 500.
At that time, the nation’s economy was beginning a slow recovery from the Housing and Financial Crisis of 2007-08.
The index has been in steady decline since summer, where it fell to -13 in August and -19 in September, indicating growing economic anxiety as Washington neared the government funding deadline — and debates heated up on Capitol Hill.
Gallup’s index asks two questions: what Americans think of the country’s current economic situation, and whether they believe it is improving or worsening. According to the Friday report 15 percent of Americans believe the economy is in “excellent or good shape,” and 28 percent say it is “getting better.” A majority 43 percent say the country is in “poor” economic shape, and 67 percent believe it is “getting worse” – again, the highest number since December 2011.
The United States faces another debt ceiling limit on Oct. 17. With the infighting in Congress exacerbated by the first government shutdown in 17 years, there is a serious threat of default on U.S. loans if lawmakers cannot agree to increase the nation’s borrowing capacity before the deadline.
A report released by the Treasury Department Thursday, accompanied by Treasury Secretary Jack Lew’s strong urging for Congress to raise the debt ceiling “immediately,” cited the significant drop in consumer and investor confidence that occurred as a result of the 2011 debt ceiling fight — a fight which ended with the successful passage of a motion to raise just hours before the deadline.
Gallup concluded the Friday report by noting that confidence rebounded months after Congress successfully avoided the debt ceiling and passed a continuing resolution at the end of 2011.
This time around Congress has already lost half of that battle, with both parties and chambers pointing blame and neither showing signs of giving in.
But the small beacon of hope discussed by a growing number of congressional leaders on Capitol Hill in the form of a “Grand Bargain” — also resurrected from 2011 — could mean an end to the last four years of fiscal governing from crises to crises, and an even greater confidence rebound if a compromise is reached.
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