Posted: Dec 21, 2012 10:58 AM
Updated: Dec 21, 2012 10:58 AM
WASHINGTON (AP) Confidence among U.S. consumers has sunk to its lowest point since July, according to a monthly index.
The University of Michigan says its consumer sentiment index for December fell to 72.9, a sharp drop from the November reading of 82.7. The November figure was a five-year high.
Peter Newland, an economist at Barclays, says consumer confidence has dropped because of uncertainty over whether Congress and the Obama administration will reach a budget deal to avert sharp tax increases and government spending cuts set to take effect in January.
Economists said confidence could fall further if the standoff over the "fiscal cliff" persists into 2013. And Peter Curtin, the University of Michigan's chief economist for the survey, said the loss of public confidence might be slow to recover even if a budget deal is reached early in the new year.
"Confidence is lost much more easily than it can be regained," Curtin said. "Blaming one side or the other for failure will only increase pessimism as it reflects a dysfunctional system for setting economic policy."
Chris Christopher, senior economist at IHS Global Insight, said the survey showed that "Americans have become increasingly worried over their personal finances, business conditions and the economic outlook."