As fiscal cliff looms, consumer confidence drops
A monthly measure of consumer confidence has dropped — along with expectations for improving business and labor conditions.
The Conference Board reported that its Consumer Confidence Index (CCI) retreated six points to 65.1 in December.
While a component of the index tracking consumer assessments of current conditions rose more than five points, a component tracking their short-term outlooks tumbled more than 14 points.
“The turnaround in expectations was most likely caused by uncertainty surrounding the oncoming fiscal cliff,” said Lynn Franco, director of economic indicators for the Conference Board. “A similar decline in expectations was experienced in August of 2011 during the debt ceiling discussions.”
Unless Congress takes action beforehand, federal tax increases and automatic government spending cuts are scheduled to kick in at the beginning of the year.
The Conference Board, a business research and networking group, bases the CCI on the results of monthly surveys of U.S. households.
Economists closely monitor the index because consumer spending accounts for more than two-thirds of all economic activity in the country.
Consumers were more optimistic in their assessments of current business and labor conditions, pushing up the Present Situation component of the index to 62.8.
The proportion of consumers responding to surveys upon which the December CCI was based who called business conditions “good” rose 2.5 points to 17.1 percent. The share of those who called conditions “bad” fell nearly four points to 27.3 percent.
The proportion of consumers who said jobs are “plentiful” edged down seven-tenths of a point to 10.3 percent. But the share of those who said jobs are “hard to get” fell more — almost two points to 35.6 percent.
A more pessimistic outlook pulled down the Expectations component of the CCI to 66.5 The share of consumers who expect business conditions to improve over the next six months dropped almost four points to 17.6 percent.
Meanwhile, 21.5 percent expect conditions to worsen, up nearly six points.
The proportion of consumers who expect more jobs to become available in the months ahead declined 2.5 points to 17 percent. The share of those who anticipate fewer job openings increased more than six points to 27.3 percent.
The proportion of consumers who expect their incomes to increase was nearly unchanged at 15.4 percent. But 18.7 percent of consumers anticipate lower incomes, up more than three points.