Consumer confidence drops to lowest level since 2011
WASHINGTON -- Concerns about the so-called fiscal cliff pushed consumer confidence down this month to its lowest level since late 2011, according to a widely watched private barometer.
The preliminary reading for January in the survey from Thomson Reuters and the University of Michigan fell to 71.3 from 72.9 last month, Reuters reported. It was the second straight monthly decline.
The last time the figure was lower was in December 2011.
Analysts had expected the reading to increase to 75 after President Obama and Congress reached a deal to avoid most of the large tax increases that kicked in on Jan. 1 as part of the fiscal cliff.
But the survey found that 35% of consumers referred negatively to the fiscal cliff negotiations, director Richard Curtin told Reuters. And although tax rates rose only for those with annual household incomes above $450,000, a temporary payroll tax cut expired on Jan. 1.
In addition, the fight over increasing the debt limit, which officials have warned could lead to a U.S. default as early as mid-February, still looms over the economy.
“Importantly, the debt ceiling debate is still upcoming and could further weaken confidence,” Curtin said.
Consumers’ view of current economic conditions hit its lowest level since July. And their expectations for the economy were even more pessimistic, reaching their lowest point since November 2011.
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