Read our January 22nd report: The Impact of Emotions on Expectations

Consumer sentiment has remained for the past three months at the lows first recorded in response to last year's shutdown of the economy. The Delta variant, supply chain shortages, and reduced labor force participation rates will continue to dim the pace of consumer spending into 2022. There is another, less tangible factor that has contributed to the slump in optimism: confidence in government economic policies has significantly declined during the past six months. To be sure, the DC logjam, including the debates on the debt ceiling and the $3.5 trillion social infrastructure program did not help, but the staged drama was largely ignored by most consumers. Consumers in the past were more attentive to the debates about extending the debt ceiling, passing major spending programs, or the face-off at the "fiscal cliff" (which may again happen in December). Unlike past debates, just 3% of consumers mentioned these policy debates when asked about recent news they had heard. Consumers presumably thought that these policies were important, but they largely ignored the dire partisan claims of an ensuing calamity. Consumers have much more basic concerns over policy. The adage "never let a crisis go to waste" mirrors the range and scale of Biden's progressive proposals, but consumers see it as too risky a strategy. When asked about their confidence in economic policies, favorable evaluations fell to 19% in early October from Biden's honeymoon high of 31% in April, while unfavorable policy evaluations rose to 48% in early October from 32% in April (see the chart). The decline in confidence in economic policies was recorded across all age, income, and education subgroups as well as among Democrats, Independents, and Republicans.