The 16-day partial shutdown of the federal government and the wrangling in Washington over the nation's finances combined to shake consumers' confidence sharply in October, the private Conference Board reported Tuesday morning.
Its widely watched consumer confidence index dropped to 71.2 from 80.2 in September.
How consumers are feeling is an important economic indicator because they purchase about 70 percent of all the goods and services that businesses produce. If consumers scale back their spending because they aren't feeling like things are going well, that can set off an unfortunate chain of events: soft sales that lead companies to postpone hiring or shed some workers, moves that then make consumers feel even more nervous and more reluctant to spend.
In Tuesday's release, Conference Board economist Lynn Franco says that "the federal government shutdown and debt-ceiling crisis took a particularly large toll on consumers' expectations."
She adds that: