The Conference Board Consumer Confidence Index, which declined slightly in November, posted a 6.4-point decline in December to stand at 65.1 (1985=100). The Expectations Index declined sharply to 66.5 from 80.9. The Present Situation Index increased to 62.8 from 57.4 last month.
Lynn Franco, Director of Economic Indicators at The Conference Board says consumers’ expectations retreated sharply in December. "The sudden turnaround in expectations was most likely caused by uncertainty surrounding the oncoming fiscal cliff," she states. "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."
Consumers’ optimism about the short-term outlook plummeted in December, states the board. The percentage of consumers expecting business conditions to improve over the next six months declined to 17.6% from 21.3%, while those expecting business conditions to worsen increased to 21.5% from 15.8%.
Consumers’ outlook for the labor market also turned more pessimistic. Those anticipating more jobs in the months ahead declined to 17.0% from 19.5%, while those expecting fewer jobs increased to 27.3% from 21.2%. The proportion of consumers expecting an increase in their incomes was virtually unchanged at 15.4 percent. However, those expecting their incomes to decline rose to 18.7% from 15.6%.