Consumer spending has been a bright spot in the fledgling economic recovery but concern over the fiscal cliff are dampening consumer enthusiasm.
The Conference Board’s consumer confidence index fell 6% in December to 65.1. That’s the lowest level since August and echoes the fall in the Thomson Reuters/University of Michigan consumer sentiment index.
In general, the Conference Board survey indicated consumers were more upbeat but not optimistic about the next six months.
The sudden about face can be blamed on the fiscal cliff and concern about failed negotiations in Congress.
Even if a last minute deal is reached to extent segments of the existing tax laws, several consumer-impacting provisions would remain in place.
Other economic reports reflect continued economic growth. Weekly jobless claims fell by 12,000 to a seasonally adjusted 350,000. That’s the third lowest level of the year. Although there could still be impact from Hurricane Sandy, the overall trend looks to remain positive.
Sales of new homes rose 4.4% to a seasonally adjusted 377,000, the highest level since April of 2010 and up 15% from one year ago.
Multiple reports continue to indicate the economy is getting better
. But it’s quite unclear how well the economy would weather going over the cliff. We have about three more days to find out.
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