Just a month after the US consumer confidence index hit a four-year high, faith in the economy is disappearing again.
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The Conference Board said its overall consumer-confidence index fell in December, dropping to 65.1 from 71.5 in November, MarketWatch reported. That puts it at its lowest level since August.
The Conference Board findings were similar to the latest data from the University of Michigan-Thomson Reuters consumer sentiment index, which found that consumer confidence dipped in December to its lowest level since July, MarketWatch reported.
Economists say the fiscal cliff negotiations are to blame, eroding the optimism that’s been developing as home prices and the job market improve in many parts of the country, the New York Times reported.
“A similar decline in expectations was experienced in August 2011 during the debt-ceiling discussions,” Lynn Franco, director of economic indicators at the Conference Board, told MarketWatch.
According to the New York Times:
If Congress and President Obama cannot agree on a deal to cut the deficit by Jan. 1, more than $500 billion in tax increases and spending cuts are set to take effect.
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“People are realizing that we may not get a compromise and they’re getting nervous,” Guy Berger, United States economist with RBS Securities, told the New York Times. “It’s a precarious situation. So far consumers are worried about the future.”
“With more Americans worried about what is in store for them around the corner, they are prone to be more cautious on the spending front,” Chris Christopher Jr., senior principal economist at IHS Global Insight, told MarketWatch. “To sum up — the fiscal cliff is the Grinch that stole consumer cheer this year. Bad timing, indeed.”