(MoneyWatch) The budget fight between President Barack Obama and congressional Republicans is throwing a scare into Americans. According to two separate studies, consumer confidence fell more in the past week than in any week since the financial crisis began.
Polls from both Gallup and Rasmussen show that consumer confidence has plummeted since the start of the month. Gallup's Economic Confidence Index has dropped 12 points to -34 in the last week. The only bigger drop in the index's history came in the week following the collapse of Lehman Brothers in September 2008. That drop was 15 points.
"It is worrying that the daily measure of consumer confidence published by Gallup fell sharply in the week since the shutdown began," Paul Dales, a senior economist with Capital Economics, wrote in a research note. "Falls in sentiment don't always translate into falls in spending, as highlighted by events during the debt ceiling debacle in 2011. But, obviously, the longer the shutdown continues and the closer the U.S. gets to a debt default, the more severe the dent to activity and the harder it will be for policymakers to judge the true health of the economy."
The latest reading in the Gallup Index's lowest level since December 2011 and well below this year's -3 peak seen in early June. During the previous debt ceiling crisis in the summer of 2011, it fell to -54. The index dropped to -65 during the Lehman crisis of 2008. Gallup also found that 67 percent of Americans say the economy is getting worse, the highest level since early December 2011.
The negative sentiment also shows up in the Rasmussen Consumer Index, which measures consumer confidence on a daily basis. As of Wednesday, it had dropped 11 points since the start of the month, when it stood at 103, the second highest it's been all year.This is very close to what the Rasmussen Index did in the week following the Lehman collapse, when it fell 12 points. Investors aren't feeling any better about the economy. Although the company's Investor Index rose a point on Wednesday to 102.6, it is down nine points from the week before.