Consumer Confidence Plunges in October

by Marilou Long on October 29, 2013

in deficit spending,Economic Indicators,Fiscal Policy,politics

Consumer confidence fell in October to 71.2 from a revised 80.2 in September. I am not surprised about the large drop in consumer confidence given both the government shutdown and all the uncertainty surrounding the launch of the ACA. Hundreds of thousands of consumers are receiving notices that their health care plans are being cancelled. Instead of the often repeated claim that “if

you like your plan, you can keep it”, many of the plans don’t meet the mandated minimum requirements of the ACA and are being cancelled and replaced by plans with much higher premiums. NBC News has reported that the administration was aware of this outcome years ago. From the linked article: Four sources deeply involved in the Affordable Care Act tell NBC

NEWS that 50 to 75 percent of the 14 million consumers who buy their insurance individually can expect to receive a “cancellation” letter or the equivalent over the next year because their existing policies don’t meet the standards mandated by the new health care law. One expert predicts that number could reach as high as 80 percent. And all say that many of those forced to buy pricier new policies will experience “sticker shock.” In addition, the non-functioning healthcare.gov website is adding to consumers’ uncertainty about how they are going to insure their families’ health needs. The lack of cooperation and compromise in Washington demonstrated by the recent shutdown has also contributed to Americans’ lack of confidence both in their elected leaders and their economic future. On a more positive note, home prices had their strongest gain in seven years rising 12.8% on an annual basis. Retail sales rose 0.4% ex autos, and industrial production was up 0.6%. As we noted in our quarterly letter, the economy could do better than its 2.0% run rate if Washington would begin to address our long term fiscal problems.

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