Even though the government reached an agreement to raise the debt ceiling, 54% of Americans surveyed said the debate over the debt ceiling has made them feel less confident in the economy, the RBC Consumer Outlook Index for August found.
Additionally, 42% said the debate has made them less confident in their own finances and investments. Seventy-six percent said the U.S. is on the wrong track, the highest percentage since July 2008. Only 24% believe the country is headed in the right direction.
The RBC Consumer Outlook Index now stands at 40.2, down 3.5 points from the 43.7 reading in July and 6.5 points below the post-recession high of 46.7 in June.
“There is clearly a strong inclination to highlight the wrangling in Washington over the debt ceiling as having weighed heavily on confidence this month,” said RBC Capital Markets Chief U.S. Economist Tom Porcelli. “However, we would caution against assigning all the blame on this one aspect of the recent backdrop, which to say the least, has been disappointing. We would also highlight the jobs index and the investment index within the overall RBC Index as particularly troubling.”
Although the larger index fell, the employment security sub-index remained relatively stable in August, declining a mere 0.8 points to 52.0. Only 37% had experienced job losses—the best score since 2008. However, 31% of respondents said that they or someone else in their household is worried about losing their job, up from 25% last month.
As far as the current conditions sub-index, this also fell, by 4.5 points, to 28.9. Fifty-nine percent of Americans said they are less comfortable making a major purchasing decision, up from 48% in July.
The investments sub-index also fell, by 4.7 points, to 31.8. Fifty-two percent of Americans think the next 30 days will be a bad time to invest in the stock market, up sharply from 35% in July.
The consumer expectations sub-index declined 3.7 points to 49.4, with 40% of Americans expecting the economy to worsen. Only 18% are hoping for improvement.