Confidence among U.S. consumers declined more than forecast in December as the budget debate in Washington soured Americans’ outlook for the economy.
The Conference Board’s index of sentiment fell to 65.1 from a revised 71.5 reading the prior month, figures from the New York-based private research group showed today. The gauge was projected to fall to 70, according to the Bloomberg survey median.
A drop in consumer expectations for the next six months to a one-year low coincides with mounting concerns about looming tax increases and government budget cuts in 2013 that threaten the expansion. At the same time, employment gains, rising home values, and lower gas prices may keep spending, which accounts for about 70 percent of the economy, from foundering.
“The sudden turnaround in expectations was most likely caused by uncertainty surrounding the oncoming fiscal cliff,” Lynn Franco, director of economic indicators at the Conference Board, said in a statement. “While consumers are quite negative about the short-term outlook, they are more upbeat than last month about current business and labor market conditions.”
Applications for jobless benefits decreased by 12,000 to 350,000 in the week ended Dec. 22, a Labor Department report showed today. Economists forecast 360,000 claims, according to the Bloomberg survey median.
Estimates for consumer confidence ranged from 62.6 to 79 in the Bloomberg survey of 66 economists. The measure averaged 53.7 during the recession that ended in June 2009.
The Conference Board’s measure of present conditions climbed to 62.8 this month, the highest since August 2008, from 57.4 in November. The gauge of expectations for the next six months decreased to 66.5 from 80.9.
The percent of respondents expecting more jobs to become available in the next six months decreased to 17 from 19.5 the previous month.
The figures stand in contrast to Bloomberg’s Consumer Comfort Index, which held close to a four-year high last week. The comfort index eased to minus 32.1 in the period ended Dec. 23 from minus 31.9 the week before.
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