Consumers begin the new year less confident in business and labor conditions, according to the latest results of a monthly index tracking their outlook.
The Conference Board reported that its Consumer Confidence Index (CCI) slumped more than eight points to fall to 58.6 in January. Declines in each of the last two months erased all of the gains made in 2012. At this time last year, the CCI stood at 61.5.
“Consumers are more pessimistic about the economic outlook and, in particular, their financial situation,” said Lynn Franco, director of economic indicators at the Conference Board. “The increase in the payroll tax has undoubtedly dampened consumers’ spirits, and it may take awhile for confidence to rebound and consumers to recover from their initial paycheck shock.”
The Conference Board, a business research and membership group, bases the CCI on the results of households surveys. Economists closely monitor the index because consumer spending accounts for more than two-thirds of economic activity in the country.
Consumer assessments of current business and labor conditions pulled down the present situation component of the CCI more than seven points to 57.3 in January.
The share of consumers responding to the survey upon which the January index was based who described business conditions as “good” fell a half a point to 16.7 percent. The proportion of those who characterized conditions as “bad” climbed more than a point to 27.4 percent.
The share of consumers who said jobs are “plentiful” dropped more than two points to 8.6 percent. Those who called jobs “hard to get” rose almost two points to 37.7 percent.
Consumers also were less upbeat in their short-term outlooks, pulling down the expectations component of the CCI almost nine points to 59.5.
The proportion of consumers who expect business conditions to improve over the next six months declined nearly three points to 15.4 percent.
However, the share of those who anticipate worsening conditions edged down a half point to 20.6 percent.
The proportion of consumers who believe more jobs will become available in coming months retreated nearly four points to 14.3 percent. The share of those expecting fewer jobs remained unchanged at 27 percent.
Meanwhile, 22.9 percent of consumers expect their incomes to decline, down almost four points. Another 13.6 percent of consumers expect their incomes to increase, down two points.