Some attribute the recent spate of less-than-encouraging news about the U.S. economy to the government shutdown, the battle over the debt ceiling, and to the reprise due in a relatively few weeks. They point to the decline in consumer confidence during and immediately after the shutdown: the Conference Board’s household confidence index plunged last week from 80.2 in September to 71.2, and the University of Michigan’s consumer sentiment index also dropped. Tellingly, the compilers of the Michigan index report that negative mention of the federal government was “the highest in more than a half-century of the surveys.”
Businessmen also profess themselves so rattled by the political turmoil that they are holding back on investing in new plants and equipment, and reluctant to add staff. The reluctance to hire is exacerbated by uncertainty surrounding the costs the implementation of Obamacare will impose on employers who have more than fifty workers, and fears that a new wave of regulations soon to be issued by the Environmental Protection Agency will drive up energy costs by making it impossible to burn coal in new power stations.
