Consumer Confidence Drops Sharply
The Conference Board this morning reported that its consumer confidence index fell from 71.5 in November to 65.1 in December. The expectations index fell sharply, from 80.9 to 66.5, while the present situation index rose from 57.4 in November to 62.8.
A conference board executive 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. A similar decline in expectations was experienced in August of 2011 during the debt ceiling discussions. While consumers are quite negative about the short-term outlook, they are more upbeat than last month about current business and labor market conditions.
Among those surveyed, optimism about the short-term outlook crashed in December, with a big shift in consumer's views about business conditions. The index reading for those expecting business conditions to improve fell from 21.3% to 17.6%, and the reading for those expecting business conditions to get worse rose from 15.8% in November to 21.5% in December.
The employment outlook also sank. Among those surveyed, only 17% expected more jobs to be available in the coming months, down from 19.5% a month ago, and 27.3% expected fewer jobs, up from 21.2%.
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