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

Aerospace workers adjust to changing industry

The number of Boeing workers dropped almost 10 percent since last year.

Tom Hoban
Are millennials warming up to life in suburbia?

They dominate the apartment market and their wants need to be accounted for, says columnist Tom Hoban.

Camano artist mixes flask, paintings for successful cocktail

Art flasks prove popular as bachelorette gifts, birthday presents and wedding favors.

Fluke’s T6 Electrical Testers receives Innovation Awards honor

Fluke’s T6 Electrical Testers have received top honors in the Tools and… Continue reading

Everett volunteer named ‘community champion’ by Molina Healthcare

Everett’s Jorge Galindo was one of seven people across the state to… Continue reading

Cascade Valley Health to hold Festival of Trees in Arlington

Cascade Valley Health Foundation will be holding their fifth annual Festival of… Continue reading

7-Eleven program helped add 500 trees, shrubs to Everett park

Last month, 7-Eleven helped plant more than 500 trees and shrubs at… Continue reading

Pentagon inspector general praises secret $80 billion bomber

US Government Accountability Office in 2016 rejected a protest filed by Boeing-Lockheed Martin.

Everett’s Sentry Credit celebrates a quarter century in business

Sentry Credit Inc. in Everett is celebrating its 25th year in business.… Continue reading

Most Read