U.S. consumers were sharply more pessimistic about the economy while views of their own personal finances and how government policies are working also weakened, in the latest poll from Investor's Business Daily and TIPP, a unit of TechnoMetrica Market Intelligence.
The IBD/TIPP Economic Optimism Index dropped nearly 17% to 38.4 in October from 46.0 in September. Readings above 50 indicate optimism, while those below 50 indicate pessimism.
"The recent gridlock in Washington, primarily the government shutdown and the stalemate in debt ceiling talks, don't inspire confidence," said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner.
The results are based on a national poll of about 900 adults conducted between Sept. 28 and Oct. 2, with a margin of error of plus or minus 3.3 percentage points.
The index is 7.2 points below its 12-month average of 45.6, six points below its reading of 44.4 in December 2007 when the economy entered the recession, and 11.1 points below its all-time average of 49.5.
The month-to-month decline of 7.6 points in the latest poll is close to the 7.9 point decline after the Middle East turmoil in March of 2011. In another comparison, during the aftermath of Hurricane Katrina in September 2005, the index shed 9.7 points.
The six-month economic outlook, a measure of how consumers feel about the economy's prospects in the next six months, tumbled 22%, to 35.8 points.
The personal-financial outlook, a measure of how Americans feel about their own finances in the next six months, fell 11%, to 48.3 points.
Meanwhile, confidence in U.S. economic policies, a gauge of views regarding how government economic policies are working, was down 6.6%, to 31.2 points.