Consumer Confidence Drops Sharply

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%.

Paul Ausick