With worries about the looming fiscal cliff weighing on consumer expectations, the Conference Board released a report on Thursday showing that U.S. consumer confidence deteriorated by much more than anticipated in the month of December.
The Conference Board said its consumer confidence index fell to 65.1 in December from a downwardly revised 71.5 in November. Economists had been expecting the index to dip to 70.0 from the 73.7 originally reported for the previous month.
With the bigger than expected decrease, the Conference Board's consumer confidence index fell to its lowest level since August.
Lynn Franco, Director of Economic Indicators at the Conference Board said, "Consumers' expectations retreated sharply in December resulting in a decline in the overall Index."
"The sudden turnaround in expectations was most likely caused by uncertainty surrounding the oncoming fiscal cliff," she added. "A similar decline in expectations was experienced in August of 2011 during the debt ceiling discussions."
The report showed that the expectations index tumbled to 66.5 in December from 80.9 in the previous month, falling to its lowest level in over a year.
The Conference Board said the percentage of consumers expecting business conditions to improve over the next six months fell to 17.6 percent in December from 21.3 percent in November, while those expecting business conditions to worsen rose to 21.5 percent from 15.8 percent.
Consumers were also more pessimistic about the outlook for the labor market, as those expecting more jobs in the months ahead dropped to 17.0 percent from 19.5 percent and those expecting fewer jobs climbed to 27.3 percent from 21.2 percent.
The percentage of consumers anticipating a drop in their incomes also rose to 18.7 percent from 15.6 percent, while the percentage expecting an increase in income was virtually unchanged at 15.4 percent.
"While consumers are quite negative about the short-term outlook, they are more upbeat than last month about current business and labor market conditions," Franco said.
The Conference Board said that the present situation index climbed to 62.8 in December from 57.4 in November.
Consumers saying business conditions are "good" rose to 17.1 percent in December from 14.6 percent in November, while those saying business conditions are "bad" fell to 27.3 percent from 31.2 percent.
While the percentage of consumers saying jobs are "plentiful" edged down to 10.3 percent from 11.0 percent, those saying jobs are "hard to get" also fell to 35.6 percent from 37.4 percent.
by RTT Staff Writer
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