US consumer confidence falls on fiscal cliff fears
WASHINGTON (AP) - 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 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, the survey showed.
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.
Expectations also plunged in August 2011 when a fight over the federal debt limit brought the government to the brink of insolvency, she said.
A separate consumer confidence survey released last week by the University of Michigan fell to a five-month low this month. And reports show the holiday shopping season was the weakest since 2008, when the country was in a deep recession.
Negotiations between President Barack Obama and House Republican leaders on a package to avert the sharp tax increases and spending cuts reached an impasse last week. Obama and congressional lawmakers return to Washington Thursday to resume talks with just days to go before economy goes over the fiscal cliff.
Treasury Secretary Timothy Geithner added pressure to the talks Wednesday by alerting Congress that the government was on track to hit its borrowing limit on Dec. 31. He said Treasury would take "extraordinary measures as authorized by law" to keep the government operating for another couple of months.
Still, he added, uncertainty over the outcome of negotiations over taxes and spending made it difficult to determine how much time those measures would buy.
The Conference Board index has risen from an all-time of 25.3 touched in February 2009. It remains well below the level of 90 that is consistent with a healthy economy. It last reached that point in December 2007, the first month of the Great Recession.
There are signs the economy is improving. The job market is slowly improving and the average number of people filing for unemployment benefits over the past month fell to the lowest level since March 2008.
Home sales are up over the past year and prices are rising, signaling the housing recovery is sustainable. Companies ordered more long-lasting manufactured goods in November. And Americans spent more in November. Consumer spending drives nearly 70 percent of economic growth.
While a short fall over the cliff won't push the economy into recession, most economists expect some tax increases to take effect next year. That could slow growth.
The Conference Board said Thursday that its consumer confidence index fell this month to 65.1, down from 71.5 in November. That's 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, the survey showed.
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.
Expectations also plunged in August 2011 when a fight over the federal debt limit brought the government to the brink of insolvency, she said.
A separate consumer confidence survey released last week by the University of Michigan fell to a five-month low this month. And reports show the holiday shopping season was the weakest since 2008, when the country was in a deep recession.
Negotiations between President Barack Obama and House Republican leaders on a package to avert the sharp tax increases and spending cuts reached an impasse last week. Obama and congressional lawmakers return to Washington Thursday to resume talks with just days to go before economy goes over the fiscal cliff.
Treasury Secretary Timothy Geithner added pressure to the talks Wednesday by alerting Congress that the government was on track to hit its borrowing limit on Dec. 31. He said Treasury would take "extraordinary measures as authorized by law" to keep the government operating for another couple of months.
Still, he added, uncertainty over the outcome of negotiations over taxes and spending made it difficult to determine how much time those measures would buy.
The Conference Board index has risen from an all-time of 25.3 touched in February 2009. It remains well below the level of 90 that is consistent with a healthy economy. It last reached that point in December 2007, the first month of the Great Recession.
There are signs the economy is improving. The job market is slowly improving and the average number of people filing for unemployment benefits over the past month fell to the lowest level since March 2008.
Home sales are up over the past year and prices are rising, signaling the housing recovery is sustainable. Companies ordered more long-lasting manufactured goods in November. And Americans spent more in November. Consumer spending drives nearly 70 percent of economic growth.
While a short fall over the cliff won't push the economy into recession, most economists expect some tax increases to take effect next year. That could slow growth.
I would fully support a flat tax that bases things soles on the NET WORTH of a person.. as you gradually accrue net worth throughout your life your taxes would exponentially go up until you just could not get any bigger and continue to pay what your flat tax rate is... for such a system to be pulled in that would mean ALL deductions and write offs would be removed! ... the only way to pay less taxes would be to not continue making so much money or LOSE / Give the money to someone else so your net worth assets would drop, that would include taxing companies and businesses that deal within our boarders AND the offices companies here have in other countries if your a US Citizen or a business owner your assets wherever they are count towards that net worth ... but again that systems depends on the system spending what they have available and no more... there would not be a deficit if government would STOP committing money we don't got!
@Freespeech It should be a flat tax on what you EARN not on your net worth in my opinion. People shouldn't be penalized because they save, buy a home, have insurance and so forth. The only people who would benefit from that kind of taxation are those who have no net worth to tax and quite frankly there are lots of them out there.
Three simple words... I don't care | Politicians in DC Democrat and Republican are all going to be held responsible for what happens in a few days... but I am guessing most of the blame is going to come on republicans and their unwillingness to increase taxes... though our countries spending is the main issue as no amount of taxes is going to fix the deficit as they are constantly spending what we don't got!... look at the tax statistics... if every deduction was flat out removed ... I bet we would still have the same problem we have now regardless of who is in office/house/senate/etc...OVERSPENDING is where this all started!.... regular everyday people ...at least most of us anyway do not spend money we do not have to spend, and the government has been spending and burdening future generations they are expecting to cover their own lack of spending restraint... it is long time we stop spending what we cannot pay for right now!... yes our economy is going to go down but you know what the economy will recover once we normalize things again to what they truly should be... unfortunate for us on the bottommost side of things but seriously not everyone can own a huge house, drive a escalade, go on exotic vacations, wear the most TRENDY clothes, jewels etc...... people as a whole and the government are both living beyond their means and that is what got us into this very mess in the first place! I say it again... NO amount of taxes will do squat when the money going out SO LARGELY DIFFERS from what is coming in....
A bunch of finger pointing with NO responsibility. Â Typical government... Â They act like a bunch of 7 yo. Â "If I'm not getting what I want, I'm not doing ANYTHING!" Â Where's the leadership that Obama promised? Â In his nose, growing like Pinochio's...
If the government doesn't have enough to pay its bills then a spending cut is exactly what they need. Â Sure it will be painful only because Wall Street will sell off and since a large portion of people have their 401k's in stocks it affects everyone. Â It is a sad state we live in now because Wall Street controls our monetary policy.
I am not worrying about the cliff we would go over...but for the Republicans...how long
they can hold on their job !
Calm down, calm down. Â The President is mixing up more Kool Aid now.
 @sentryone I just figured he was working on his back-swing...