Consumer Confidence in U.S. Falls to Lowest Level Since 2011
Source: Bloomberg
By Jeanna Smialek - Jan 29, 2013
Confidence among U.S. consumers declined more than forecast in January, reaching the lowest level in more than a year as higher payroll taxes took a bigger bite out of Americans paychecks.
The Conference Boards index decreased to 58.6, the weakest since November 2011, from a revised 66.7 in December, figures from the New York-based private research group showed today. The January reading was lower than the most pessimistic forecast in a Bloomberg survey, which had a median estimate of 64.
The drop in confidence coincides with a two percentage- point increase in the payroll tax used to fund Social Security, a hurdle for consumers after a projected pickup in spending in the fourth quarter. The outlook for employment prospects and incomes also deteriorated this month, todays data showed.
The uncertainty and bickering is weighing it down, Richard F. Moody, chief economist at Regions Financial Corp. in Birmingham, Alabama, said before the report. Im convinced that a lot of people didnt realize that their taxes were going up in January. These higher payroll taxes, theyre going to put that much of a dent in disposable income.
Read more: http://www.bloomberg.com/news/2013-01-29/consumer-confidence-in-u-s-falls-to-lowest-since-november-2011.html
PSPS
(13,594 posts)Never mind that people are realizing that we're going to have at least another two years of a "do nothing congress." Or that the Justice Department will remain closed for the next four years.
It's ABSOLUTELY related to the expiration of the payroll tax cut. Fact of the matter is most people had no clue that the payroll tax would rise this year. Most people unfortunately are ill informed and were caught off guard by the lower take home pay. The Chief Economist of the Comference Board said as much. But you don't need his opinion to make the logical connection between less take home pay and lower confidence.
Yo_Mama
(8,303 posts)Many households are too strapped to easily swallow it:
http://research.stlouisfed.org/fred2/series/CCDIHBQ156N?cid=33119
The following graph only goes through Q3 2012, but you can see how things have tightened up since the Fed started playing around with stimulus. There are huge numbers of households that live on moderate incomes that cannot withstand the price increases for basics.
Response to Purveyor (Original post)
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