It hit the markets, which plunged as a result, and now it has clearly hit retail sales. The "it" being the open warfare between President Obama and the U.S. Congress through July and the start of August. Consumer confidence plunged in August after the unnecessarily bruising battle over the U.S. budget crushed stock prices and pushed the nation to the brink of a default that would have had even more disastrous consequences for the global economy.

The inability of the sides to reach agreement in a courteous and amicable manner on raising the debt ceiling clearly brought out the ideological divide between the parties. But even more so it appeared to become apparent to the man and woman in the street that there is no clear direction in U.S. economic policy. Politicians, it seems are doing what is best for their respective party rather than the country.

With the U.S. economy still struggling to find its way forward – two years after it officially emerged from recession – consumers appear to be voting with their feet and staying away from the stores, or at least choosing carefully the items that they buy and weighing up all the options before committing.

For the past two years, economists have been talking about the "New Normal", shorthand for a new approach by consumers to their everyday lives. No more extravagant spending financed by what had been rising real estate valuations. High unemployment and fear of being retrenched on the part of many millions of Americans along with clear and continuing evidence that the housing market is stuck in a rut is causing many to pay off debts and start saving money – with the proverbial rainy day for some seeming to be getting ever-closer.

The country is not generating enough jobs to rapidly replace the nine million that were lost during the recession. Even President Obama's speech to Congress – and the nation in early September – proposing close to $450 billion in job creation measures was not enough to persuade the markets that a turnaround could be created since it is not clear that the proposal will be accepted on both sides of the aisle. And all that is having an impact on the retail sector, the most important element of the U.S. economy which has, historically, accounted for 75 percent of America's Gross Domestic Product.

Confidence in the U.S. economy and its politicians' ability and desire to bring about change has never been lower. Consumers seem to be concluding that they can only trust themselves to shape their destinty. And the upshot is the latest U.S. retail sales figures which showed that spending stalled in August as consumer confidence crumbled, according to the Commerce Department's monthly report.

Sales were unchanged from July, which was a considerably weaker reading than the average forecast for a 0.2 percent increase which, in itself, was somewhat anemic. In addition, sales growth during July was revised downward to 0.3 percent. The statistics appear to confirm that growth in the first two months of the third quarter was at a lower level than many economists expected.

Not including automobiles, sales edged up just 0.1 percent last month, less than forecasts of a far from exceptional 0.3 percent increase. There was a 0.3 percent decline in sales of motor vehicles and parts, while a rise in sales of electronics, petrol and food were canceled out by falls in car, furniture and clothes buying. To top it off, spending at restaurants and bars also slipped.

However, it should also be noted that diamond jewelry sales are faring well. Just last week Diamond Trading Company CEO Varda Shine said that she expected double-digit sales growth in the United States. And before that, and for most of this year, retail jewelry sales have appeared to climb strongly.

At the start of this month one of the leading retail jewelers in the United States, Zale Corp, posted an increase in sales in its fiscal fourth quarter of 9.4 percent from the same period of last year to $377.3 million. In addition, Zale Corp said reported that same-store sales, an important pointer for the direction of retail sales, rose by 9.8 percent.

Similarly, last month, Signet Jewelers Ltd reported a 10.8 percent rise on the year in revenues to $797.6 million for its second fiscal quarter, while quarterly profit jumped by 71.3 percent to $66.3 million from $38.7 million a year earlier. The firm said that sales at stores open at least a year, a critical indicator for the retail industry, jumped by 12.2 percent in the United States. Around 80 percent of Signet's sales are in the United States with the remainder in Britain. Signet said its results were boosted by continuing strong sales its mid-tier Kay Jewelers and more upscale Jared chains in the United States.

In addition, leading online diamond and jewelry retailer, Blue Nile, reported a 5.1 percent rise on the year in net sales to a record for second quarter sales to $80.5 million, while net income edged up 1.3 percent to $2.8 million.

Is there a dichotomy between sales of regular items and sales of jewelry? For the moment the picture is unclear. However, in the run-up to Christmas and the vital sales season for the diamond and jewelry business, a clearer picture will become available, and it is also likely to show the effect of rising diamond prices that wholesalers and retailers paid through to at least July when diamond prices were on a tear.