Consumer confidence plunges in December

Dec 24, 2012

(Phys.org)—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 /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 predicts. Discounted prices and record low interest rates have forestalled declines in buying attitudes but consumers are likely to reduce purchases if income or increase in 2013.

Personal Finances Weaken

Personal financial expectations fell to their lowest level in a year. Financial gains were expected by just one in four households in December; the majority anticipated no income increase. Even though consumers expected a low inflation rate, the majority nonetheless expected a declining inflation-adjusted income in the year ahead.

This video is not supported by your browser at this time.

Economic Slowdown, Rising Unemployment Anticipate

Consumers anticipated at least a slowdown in economic growth. They more frequently expected a during the year ahead without a resolution to the fiscal cliff. Just one-third of all consumers expected an uninterrupted expansion over the next five years. The proportion that expected a rising during the year ahead jumped to 35 percent in December, up from 19 percent in October and the highest level since summer 2011.

Consumer Sentiment Index

The Sentiment Index was 72.9 in December 2012, down from 82.7 in November, but just above last December's 69.9. Most of the December decline was in the Expectations Index, which fell to 63.8, down from 77.6 in November and the lowest level since last December's 63.6. The Current Conditions Index fell to 87.0 in December from 90.7 in November and was well above last December's 79.6.

Explore further: Marcellus drilling boom may have led to too many hotel rooms

add to favorites email to friend print save as pdf

Related Stories

Consumer confidence posts a significant gain in September

Oct 01, 2012

Consumer confidence improved substantially in September due to more favorable prospects for the national economy, according to University of Michigan economist Richard Curtin, director of the Thomson Reuters/University ...

Consumer confidence improves slightly in August

Sep 03, 2012

(Phys.org)—Consumer confidence improved slightly in August due to consumers' more favorable evaluations of their present financial situations, according to University of Michigan economist Richard Curtin, ...

Recommended for you

Marcellus drilling boom may have led to too many hotel rooms

20 hours ago

Drilling in Pennsylvania's Marcellus Shale region led to a rapid increase in both the number of hotels and hotel industry jobs, but Penn State researchers report that the faltering occupancy rate may signal that there are ...

Entrepreneurs aren't overconfident gamblers

Sep 17, 2014

Leaving one's job to become an entrepreneur is inarguably risky. But it may not be the fear of risk that makes entrepreneurs more determined to succeed. A new study finds entrepreneurs are also concerned about what they might ...

User comments : 2

Adjust slider to filter visible comments by rank

Display comments: newest first

rwinners
3.7 / 5 (3) Dec 25, 2012
It is more than time that the Bush tax cuts expire. Let it happen.
VendicarD
3 / 5 (2) Dec 25, 2012
In 4 months, due to Republican failure and treason, America will re-enter it's last recession as a single nation.