Crisis of confidence grips U.S. economy
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Early last month, the debt ceiling negotiations finally came to an end with an 11th hour agreement to raise the limit and cut nearly $1 trillion in spending. The debate leading up to the deal was unnecessarily drawn-out and bitterly partisan – two things Americans weren’t particularly thrilled about. The affects of the debate are still being felt now, and will probably continue to be felt for the foreseeable future.
The ordeal cost the U.S. its AAA credit rating and has created a crisis of confidence for American consumers – the foundation of the U.S. economy. Politico reports that consumer confidence took a nose dive last month, dropping to 44.5 from 59.2, the largest drop since 2009 and the lowest it has been since April 2009. Meanwhile, Americans have very little confidence in elected officials to make the right decisions to spur a recovery.
One pollster explained, “The debt ceiling negotiation is an extremely significant event that is profoundly and sharply reshaping views of the economy and the federal government” and resulted in “a scary erosion in confidence.” And as Politico notes, this crisis of confidence comes at a time when the country’s economy can least afford it.
The skepticism of the United States’ ability to get its finances under control isn’t just contained to our borders. Joining a choir of concern Reuters reports Juergen Stark, a policymaker for the European Central Bank, warned the U.S. “had an ‘enormous’ debt problem and lacked the structures to get the problem under control.”
As economic uncertainty and dropping consumer confidence continue to hamstring our economy, the President is preparing to make a major economic address next week. (Slated for September 8th after a minor scheduling skirmish.) Hopefully the White House can rise above the political gridlock that has gripped Congress and produce a plan that addresses the unsustainable path of federal spending. Lawmakers must put aside personal interests and work toward actionable solutions for the country’s spending addiction. Only then can economy regain its footing and Americans can get back to work spearheading a sustained recovery.