The Consumer Confidence Index, a bellweather gauge on American sentiment every month, fell in December by six points.
The reading in December was 65.1, down from November’s 71.5. The expectations component fell the sharpest to 66.5 from 80.9, while the present situation portion rose to 62.8 from 57.4.
Lynn Franco, director of economic indicators at The Conference Board, said, “Consumers’ expectations retreated sharply in December resulting in a decline in the overall Index. The sudden turnaround in expectations was most likely caused by uncertainty surrounding the oncoming fiscal cliff. A similar decline in expectations was experienced in August of 2011 during the debt ceiling discussions. While consumers are quite negative about the short-term outlook, they are more upbeat than last month about current business and labor market conditions.”
The expectations component, or the longer-term outlook, reflects consumer sentiment over the next six months. Those who expect business conditions to worsen rose to 21.5 percent from 15.8 percent. The outlook for the labor market also turned pessimistic, with those expecting fewer jobs rising to 27.3 percent from 21.2 percent.
October was the best month so far, with a reading of 73.1 that hit a four-year high. November’s initial read of 73.7 was adjusted downward to 71.5 in The Conference Board’s December report.