Government shutdowns and consumer confidence: evidence from US news coverage and Google Trends

Purpose This study examines the effect of US government shutdowns on consumer confidence and investigates the potential transmission roles of economic policy uncertainty, equity market volatility and global supply chain pressure. Design/methodology/approach Using monthly US data from November 2002 to June 2025, the study employs a static generalized method of moments (GMM) framework to estimate the relationship between government shutdowns and consumer confidence and to examine the proposed transmission mechanisms. Government shutdowns are measured using news coverage, while Google Trends provides an alternative measure based on public search attention. Findings The results show that government shutdowns reduce US consumer confidence across alternative confidence and shutdown measures. The mechanism analysis identifies global supply chain pressure as the strongest transmission channel, followed by equity market volatility, while economic policy uncertainty plays a more moderate role. These findings indicate that political disruptions influence household sentiment through distinct logistical, financial and informational channels. Practical implications The findings highlight the importance of stable and predictable fiscal governance for maintaining consumer confidence. Reducing the frequency and duration of government shutdowns and clearly communicating fiscal resolutions can help stabilize household expectations. Policymakers can mitigate the economic impact of political disruptions by improving institutional coordination and transparency in fiscal negotiations. The results also suggest that households and firms should account for political and operational disruptions when planning consumption, investment, and operational decisions. Recognizing the informational, financial, and logistical channels through which shutdowns affect sentiment can support more resilient economic planning. Originality/value This study provides new empirical evidence on the relationship between government shutdowns and US consumer confidence and extends the analysis by identifying the mechanisms through which these institutional disruptions are transmitted to households. By jointly examining informational, financial and logistical channels, the study broadens understanding of how domestic political disruptions shape consumer sentiment and provides mechanism-specific insights relevant to policy responses during periods of institutional uncertainty.