Gallup's Economic Confidence Index dropped 14 points since the government shutdown, the lowest it has been since December 2011.
The poll acknowledged the spiral as part of a developing trend:
“Economic confidence had already been dropping prior to this week's official shutdown, with a slide to -19 for the month of September, compared with -13 in August. But a significantly sharper decline in confidence has been evident over the past three days just as the government partially closed down -- leading to the current -34 three-day average.”
Economists, however, are predicting increased growth between January and March. According to Bloomberg Businessweek:
“Goldman Sachs estimated that the shutdown would suppress the economy’s annualized growth rate by about 0.2 percentage points if it were to last one week and 0.4 percentage points if it lasted two weeks. But the worse the decline in the fourth quarter, the better the first quarter will look: Goldman predicts ‘a positive effect of the same magnitude in Q1 as federal spending returns to its non-shutdown level.’”
President Obama warned Monday the shutdown “would throw a wrench into the gears of our economy at a time when those gears have gained some traction.”
The United States has the largest global economy and it has never fully recovered from the 2008 crash.
The 2013 Index of Economic Freedom noted that truly restoring the economy would require:
“significant policy reforms, particularly in reducing the size of government, overhauling the tax system, transforming costly entitlement programs, and streamlining regulations.”
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