Consumer confidence dropped last week to an eight-month low as Americans grew increasingly concerned the budget standoff in Washington will damage the world’s largest economy.

The Bloomberg Consumer Comfort Index declined in the period ended Oct. 20 to minus 36.1, the lowest since February, from minus 34.1. More households were pessimistic about the economy than at any time in the past year even as lawmakers approved a deal that ended the partial shutdown of federal agencies.

The compromise funds the government into early 2014, raising the prospect that the dispute over fiscal policy will continue through the holiday-shopping season. The stalemate, combined with disappointing job growth, risks depressing consumer spending, which accounts for 70 percent of the economy.

“Households are suffering from a post-shutdown hangover,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. Any rebound in confidence sparked by last week’s agreement will probably be short-lived as the damage done by the government’s closing ripples through the economy and employment, he said, which “will likely weigh heavily on overall consumer sentiment for the remainder of 2013.”

Other reports today showed more Americans than forecast applied for unemployment benefits last week and the trade deficit in August was little changed.

Jobless claims decreased by 12,000 to 350,000 in the week ended Oct. 19, the Labor Department said in Washington. The median estimate of 48 economists surveyed by Bloomberg called for 340,000 claims.

Trade Deficit

American imports exceeded exports by $38.8 billion in August from a revised $38.6 billion in July that was smaller than previously reported, the Commerce Department reported.

Last week’s decline marked the comfort gauge’s fourth consecutive drop. It’s now fallen almost 13 points since reaching a more than five-year high of minus 23.5 in August.

Employers in the U.S. added 148,000 workers to payrolls in September, fewer than the median forecast of economists surveyed by Bloomberg, Labor Department figures showed this week. The unemployment rate fell 0.1 percentage point to 7.2 percent, the lowest since November 2008. A faster pickup in hiring and wages would help underpin consumer spending.

Comfort Indexes

All three components of the consumer comfort index receded last week. The gauge of Americans’ current views on the economy deteriorated to minus 68.2, the lowest since October 2012, from minus 65.3 the week before.

The buying-climate measure fell to minus 38.3 from minus 36.9 as fewer respondents said that now is the time to make purchases. The reading for personal finances declined to minus 2, the worst since April, from minus 0.1.

Cheaper fuel prices are allowing Americans to stretch their paychecks further. The average cost of a gallon of regular-grade gasoline fell to $3.34 on Oct. 22, the lowest since Jan. 24, according to data from AAA, the nation’s largest motoring group. Since the end of August, prices have eased by about 25 cents per gallon of fuel.

Rising home prices have also given a boost to personal finances, particularly for wealthier Americans. House prices climbed 8.5 percent this year through August, the Federal Housing Finance Agency said yesterday. The price increase for the Pacific area, which includes California and Washington, was 18.2 percent from a year earlier, the FHFA’s report said.

Holiday Shopping

Nonetheless, some companies are saying customers are more hesitant ahead of the holiday-shopping season that begins next month as Americans continue to grapple with government infighting, budget cuts and an increase in the payroll tax.

“We’ve seen an overall slowdown, a little bit of softness in our traffic,” David Lenhardt, chief executive officer of PetSmart Inc., a Phoenix-based retailer of pet supplies, said on an Oct. 17 earnings call. “We do think it’s an uncertain consumer environment. I think whether it be the shutdown, whether it be payroll tax, whether it be sequester, the customer is more uncertain these days.”

Today’s confidence figures showed a growing gap between homeowners and renters, the widest in nearly three years. The gauge of sentiment among renters was minus 53.9 last week, the lowest in more than a year.

The confidence reading for political independents also hit a more than one-year low, declining to minus 45.1. Republicans’ moods improved last week to minus 22.2 from minus 25, while Democrats showed a decrease to minus 30.3 from minus 26.6.

Phone Survey

The Bloomberg Consumer Comfort Index, compiled by Langer Research Associates in New York, conducts telephone surveys with a random sample of 1,000 consumers ages 18 and older. Each week, 250 respondents are asked for their views on the U.S. economy, personal finances and buying climate. The margin of error for the headline figure is 3 percentage points.

The percentage of negative responses is subtracted from the share of positive views and divided by three. The most recent reading is based on the average of responses over the previous four weeks.

The comfort index can range from 100, indicating every participant in the survey had a positive response to all three components, to minus 100, signaling all views were negative.