"We had lost a little momentum going into the shutdown. It could be a lackluster holiday retail season, and I think we're going to continue plodding along here."
- Stephen Stanley, chief economist at Pierpont Securities LLC
A 16-day long government shutdown and political disputes in the world's largest economy are starting to show its real effect on the economy, leading to a large toll on consumers' and businesses' mood and willingness to increase spending. A report from the Conference Board showed a gauge of Americans' mood plunged to 71.2 in October, retreating from an upwardly revised 80.2 a month earlier, and falling short of analysts' expectations, who claimed for a 75.9 figure. Meanwhile, an index of current situation eased to 70.7 from 73.5 in September, while consumers' expectation had softened as well. Furthermore, the share of respondents expecting business conditions to improve over the next six months sank to 16.0% from 20.6%. A separate report from the Labor Department unveiled data that wholesale prices unexpectedly fell by 0.1% in September, due a drop in food costs, another sign inflationary pressure will remain subdued. The so-called core PPI rose 0.1% after staying flat in August. Also Tuesday, the Commerce Department said retail sales fell 0.1%, restrained by the steepest decline in car sales since October 2012. Excluding auto sales, however, retail sales inched higher 0.4%.
A partial governmental lockdown for half of the month are becoming a serious drag on the economy, as it has already pushed consumer expectations to a seven-month low, raising concerns the U.S. economy is cooling.
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