My must read today is "Government shutdown would threaten fragile economy" in Politico:
"If it’s short-term, three or four days, then the public doesn’t really care about a shutdown and the economy goes on as usual," said David Kotok, chief investment officer at money management firm Cumberland Advisors. "If it goes three or four weeks or longer, then you do serious damage to the economy, triggering a recession and destroying consumer confidence in a way that could take years to rebuild."
Stocks may drop at the beginning of a shutdown if a last-minute deal doesn’t materialize by midnight Monday. But they would probably not tank unless a shutdown drags on. Then panic could start to set in.
My question: What about consumer confidence?
If the polls are right and the majority of people do not want a shutdown, will they not look at this moment and say, 'Wait, this could be bad, all the news programs say this might be bad, so we should spend less and start saving a little more in case we see another recession?' A decrease in consumer confidence will hurt the economy. And that would make the cost of a shutdown rise even more.