U.S. consumer confidence tumbled in December, driven lower by fears of sharp tax increases and government spending cuts set to take effect next week. The Conference Board reports that its consumer confidence index fell this month to 65.1, down from 71.5 in November. That is a second straight decline and the lowest level since August. The survey showed consumers are slightly more optimistic about current business conditions and hiring. But their outlook for the next six months deteriorated to its lowest level since 2011, the survey showed. Lynn Franco, the board’s director of economic indicators, says the decline in expectations for the next six months is a signal that consumers are worried about the “fiscal cliff.” That’s the name for the automatic spending cuts and tax hikes that take effect Jan. 1 if the White House and Congress can’t reach a budget deal. Expectations also plunged in August 2011 when a fight over the federal debt limit brought the government to the brink of insolvency, Franco says. A separate consumer confidence survey released last week by the University of Michigan fell to a five-month low this month. And reports show the holiday shopping season was the weakest since 2008, when the country was in a deep recession. Negotiations between President Barack Obama and House Republican leaders on a package to avert the sharp tax increases and spending cuts reached an impasse last week, and are set to resume today.
Today’s poll question: Do you think failure to avoid the “fiscal cliff” would have a significant negative impact on your personal finances?
