Consumer confidence falls on fiscal cliff fears

WASHINGTON — 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 said Thursday that its consumer confidence index fell this month to 65.1, down from 71.5 in November. That’s the 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.

Lynn Franco, the board’s director of economic indicators, said 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.

A separate survey released last week by the University of Michigan showed consumer confidence fell in December to a five-month low. And a report from MasterCard Advisors Spending pulse indicated holiday sales grew in the two months before Christmas at the weakest rate since 2008, when the country was in a deep recession.

The December drop in confidence “is obvious confirmation that a sudden and serious deterioration in hopes for the future took place in December — presumably reflecting concern about imminent `fiscal cliff’ tax increases,” Pierre Ellis, economist with Decision Economics, wrote in a note to clients.

At one point, the Dow Jones industrial average fell as much as 150 points. But the market came back in the final hour of trading on a potential sign of movement in the talks. The Dow recouped nearly all of its losses to close down just 18 points at 13,096.

More in Herald Business Journal

Boeing could help launch orbiting space station for the moon

“We should have a lunar base by now. What the hell has been going on?”

How the Airbus-Bombardier alliance could squeeze Boeing

“It makes Boeing look like they’ve been playing tic tac toe against a chess master,” says an analyst.

More self-awareness could help build a better medical system

Marcy Shimada of Edmonds Family Medicine writes the second in a series about fixing our health care system.

Scratch-and-sniff brochures aimed to prevent disaster

Puget Sound Energy has distributed more than a million scratch-and-sniff brochures to… Continue reading

Jewelry, accessories store Fuego opens second site in Snohomish County

Northwest-based jewelry, accessories and gifts store Fuego opened a new outlet store… Continue reading

Extreme cleaning company Steri-Clean opens in Mukilteo

The first Washington franchise of the Steri-Clean company will celebrate its grand… Continue reading

Justices to hear government’s email dispute with Microsoft

A lower court ruled emails in a drug case couldn’t be searched because they were in Ireland.

Negotiators give up hope of rewriting NAFTA this year

A fourth round of negotiations between the U.S., Mexico and Canada ended in mutual exasperation.

Facebook acquires TBH, an anonymous teen compliment app

TBH, short for “to be honest,” prompts users to answer polls about people they know.

Most Read