Consumer confidence plunges in December
December 21, 2012
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ANN ARBOR—Confidence plunged in December as consumers confronted the rising likelihood that political gridlock would push the country over the fiscal cliff. Consumers were more pessimistic about their future finances, and more pessimistic about the outlook for the overall economy and job prospects, according to University of Michigan economist Richard Curtin, director of the Thomson Reuters/University of Michigan Surveys of Consumers.
One-in-four consumers spontaneously mentioned hearing about prospects for higher taxes when asked to identify what economic news they had heard, the highest level ever recorded. While the Sentiment Index is still well above the August 2011 low associated with the Congressional debate on taxes, spending and the deficit, if no resolution is reached the falloff could easily worsen in the weeks ahead, Curtin predicted. Discounted prices and record low interest rates have forestalled declines in buying attitudes but consumers are likely to reduce purchases if income or payroll taxes increase in 2013. (more…)