Americans are fretting over their finances and one reason for it is the ongoing debate in Washington over the federal budget and the debt limit, according to the author of an economic data report called the Money Anxiety Index.
The stress has tamped down consumer spending and stalled employer hiring, making a bad situation worse.
"The discussion about the government’s ability to meet its financial obligations and possibly reducing its credit rating is causing economic uncertainty in the business sector, which responds with cautionary measures such as further slowdown in hiring," said Dan Geller, chief research officer at Money Anxiety Index.
"On the consumer side," he added, "the uncertainty about a possible reduction in payments, such as Social Security, is contributing to a decrease in discretionary spending."
The Money Anxiety Index measures various economic indicators linked to consumers' financial stress. It measures how those indicators affect consumer behavior rather than how consumers say they feel about the economy.
The index now stands at 93.4. It peaked at 136.0 during the early 1980s recession and fell to 40.3 in the mid-1960s. The higher the number, the higher the level of financial anxiety.
In Atlanta, the view of the impact of budgetary negotiations on consumers was different.
"People are anxious, but not because of the debt issue. Everybody knows there will be some resolution," said Rajeev Dhawan, director of the Economic Forecasting Center at the Robinson College of Business at Georgia State University.
"I don't smell panic in the air," Dhawan said, noting that things were worse in the fall of 2008.
"It hasn't shown up in the financial markets at all," he added.
Wes French, partner in French Wolf & Farr, an Atlanta-based wealth management firm, said that while there is considerable"chatter" about the debt debate, his high net worth clients haven't been calling any more frequently or making major shifts in their assets.
"There really hasn't been any of that," he said.
But, he added, what the budget debate is doing "is adding to the uncertainty." And that is "putting a brake on our economy that might not otherwise be there."
