Gallup's Economic Confidence Index tumbled 16 percentage points to average minus 35 in October, the sharpest monthly drop since Gallup began tracking economic confidence daily in 2008. Confidence did pick up near the end of the month.
Americans' confidence in the U.S. economy sank for the month of October amid the partial U.S. government shutdown impasse over the federal debt limit. For the entire month, Gallup's Economic Confidence Index was down 16 points, the sharpest monthly drop since Gallup began tracking economic confidence daily in 2008. Confidence improved after leaders in Washington reached a deal to end the shutdown, but it has not yet returned to pre-shutdown levels.
The index in October is the lowest for an entire month since it registered minus 38 in December 2011, as Americans' confidence slowly recovered from the 2011 U.S. federal debt crisis and subsequent downgrading of the nation's credit rating. Confidence is significantly worse than it was in May of this year, when it reached minus 7, its monthly peak.
The Economic Confidence Index began to decline in mid-September, as the fiscal negotiations and partisan brinkmanship intensified. It plummeted to minus 34 in the first week of October as the partial government shutdown began on October 1, registering the sharpest weekly decline since Lehman Brothers collapsed in September 2008, and grew worse the following week. Confidence slowly inched up after the government shutdown ended on October 17, finishing at minus 29 for the week ending November 3, but has not yet recovered to mid-September levels.
Gallup's Economic Confidence Index is based on two components: Americans' assessments of current economic conditions in the United States and their perceptions of whether the economy is getting better or worse. Both components soured last month during the shutdown, but Americans' economic outlook declined more than twice as much as their views of the current economic situation.
In October, 68 percent of Americans said the economy is getting worse-the highest such percentage in nearly two years- while 28 percent said it is getting better. This results in a net economic outlook score of minus 40, down 22 points from September.
By contrast, October's minus 29 net current conditions score-based on 15% of Americans saying the economy is in excellent or good shape, and 44 percent saying it is poor-is down 10 points from the prior month.