It is starting to show up in the numbers: the debt-ceiling and government-shutdown debacles are worming their way into the economy. Americans blame the already single most disparaged institution, Congress, for it and have started to react economically. Clicks of seatbelts being fastened can be heard around the world.
Congressional approval ratings plunged from an already abysmally low 19% in September to 11% in October, just a notch above Gallup’s all-time low of 10%. Republicans punished Congress in a relatively modest way, cutting their approval rating from 18% to 15%. But Independents slashed their approval rating from 19% to 13%. And Democrats went ahead and demolished Congress, chopping their approval rating from 20% in September to 5% now.
Democrats are unified in how much they despise Congress. More specifically, Gallup says, they despise the Republican-controlled House due to what is perceived to be its extortionary attack on the Affordable Care Act, after all other democratic and legal measures, including a Supreme Court challenge, have failed to dismantle it.
That screaming disapproval of Congress is likely to get worse. If the last effort to use the threat of sending the US into default as a bargaining chip is any guide: during the actual theatrics in 2011, the approval rating dropped to 13%. Afterwards, as a bitter aftertaste lingered in their mouths, Americans sent the approval rating down to 11%! If this trend plays out this time around, approval ratings will soon be in the single digits.
But as they say: Lawmakers bring home the bacon, and Americans vote with their wallet. Hence, they awarded their own representative an average approval rating of 44% on the principle that all lawmakers are despicable, except my lawmaker (down from 46% in May, the last time that measure was included in the survey).
Lawmakers, if they have time between fund-raising and grandstanding, might read these surveys too and are aware that they, as a whole, are a despicable bunch. But these concerns, Gallup reports, “may be allayed to some degree by the finding that many more Americans approve of their particular representative than approve of Congress more generally.” Because what matters is collecting money, getting reelected, and for some, winning the primary in the next presidential election. Après nous le déluge.
But the deluge is already here. First victim of the debt-ceiling-and-shutdown charade: the confidence Americans have in the economy. It got hammered. Gallup’s three-day rolling average peaked in early June at -3, when Americans were still largely buying the hype they’d been offered for months. They’d been bamboozled by QE Infinity and asset bubbles. Everyone loves asset bubbles. That -3 was the highest since before the financial crisis.
But then QE Infinity suddenly came with a question mark, asset bubbles began to deflate just one tiny bit, and some of it impacted economic confidence. By early September, it had dropped 10 points to -13. Then the debt-ceiling-and-shutdown fight started in serious, and by the end of September, economic confidence had drifted down to -20. But last week, it plunged to -34. The 14-point drop was the largest weekly drop since the collapse of Lehman (when it dropped 15 points). The index has now plummeted 31 points since early June.
It’s starting to show up in metrics the count dollars: After running up their spending all year, from $80 on average per day just after the holidays to $95 per day in August – not seen since the glorious pre-Lehman days in 2008! – Americans suddenly reported to have slashed their spending in September to $84 per day.
How huge is the $11 per day drop in August-September spending? It compares to a $3 to $4 drop for the years 2010-2012 and a $1 to $2 gain in 2008 and 2009. Other current retail indicators such as weekly sales at chain stores are also dropping. The Washington shenanigans are now getting blamed directly – as they pile on top of the squiggling ugly mass of other economic challenges. And the clicks of seatbelts being fastened can be heard around the world.
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.