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Government shutdown, labor strikes will likely weigh on US consumers’ attitudes

<i>Mario Tama/Getty Images</i><br/>People shop in the produce section of a grocery store on September 12 in Los Angeles
Mario Tama/Getty Images
People shop in the produce section of a grocery store on September 12 in Los Angeles

By Bryan Mena, CNN

Washington, DC (CNN) — Americans are taking notice of a possible government shutdown and the uncertainty of ongoing labor strikes, according to the University of Michigan’s latest consumer sentiment survey.

The university’s Consumer Sentiment Index edged lower by 1.4 points in September, according to a final reading. That means US consumers didn’t feel much gloomier this month — but that could change in October.

“Consumers are understandably unsure about the trajectory of the economy given multiple sources of uncertainty, for example over the possible shutdown of the federal government and labor disputes in the auto industry,” said the university’s Surveys of Consumers Director Joanne Hsu in a release.

“Until more information emerges about these developments, though, consumers have reserved judgment on whether economic conditions have materially changed from the past few months,” she added.

The survey’s measure of consumers’ expectations of future business conditions inched higher to a reading of 66 in September, up from August’s reading of 65.5. Meanwhile, Americans’ expectation of inflation rates in the year ahead moderated to a 3.2% rate this month, down from 3.5% in the prior month.

Consumer sentiment soured in May as congressional lawmakers debated raising the federal government’s debt limit right up until the 11th hour, barely averting a US default. Americans’ moods could falter in a similar fashion if the government shuts down because Congress didn’t approve new spending. The shutdown’s full impact also depends largely on how long it lasts.

For now, it seems like House Republicans are unlikely to reach a consensus on a spending bill that would also pass through the Senate by Saturday’s midnight deadline. That would mean some federal workers become furloughed and agencies operate with skeleton crews, hamstringing agencies’ ability to provide crucial government services.

The ongoing United Auto Workers strike is also not expected to end soon. The UAW said it is expanding its strike to additional facilities of automakers Ford and GM.

There’s also an expected strike from more than 75,000 health care employees at hundreds of Kaiser Permanente facilities across California, Colorado, Oregon, Washington, Virginia, and Washington, DC, starting Wednesday, if contract negotiations fall through.

There are also two unions of culinary workers and bartenders that represent 60,000 employees in Las Vegas and Reno that voted Tuesday to authorize a strike.

With so much turmoil, Americans will likely feel uneasy in the coming weeks, which could affect their spending. A separate report from the Commerce Department released Friday showed that Americans increased their spending by 0.4% in August, a slowdown from July’s 0.9% gain.

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