NEW YORK – Consumer confidence fell to a four-month low in December as a looming budget crisis sapped what had been a growing sense of optimism about the economy, a private sector report released on Thursday showed.
The Conference Board, an industry group, said its index of consumer attitudes fell to 65.1 from a downwardly revised 71.5 in November. Economists had expected a reading of 70.0, according to a Reuters poll.
November's number was originally reported as 73.7.
While the present situation index rose to 62.8 from an upwardly revised 57.4, its highest in more than four years, the overall survey suggested most consumers expect things to worsen.
"Consumers' expectations retreated sharply in December resulting in a decline in the overall index," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement. "The sudden turnaround was most likely caused by uncertainty surrounding the oncoming fiscal cliff."
The fiscal cliff refers to $600 billion of automatic tax increases and spending cuts set to take effect in January unless Congress acts to stop them. President Barack Obama and Republican leaders have failed to agree to a long-term deficit reduction deal that would avert the situation.
The expectations index fell to 66.5 from a downwardly revised 80.9. December's reading was the lowest in more than a year.
Franco said a similar pullback in consumer expectations was seen in August 2011, when political bickering over raising the U.S. debt ceiling led to a sharp drop in the stock market.
Consumers' labor market outlook also turned a bit more pessimistic. The "jobs hard to get" index fell to 35.6 percent from a revised 37.4 percent the month before, but the "jobs plentiful" index also fell to 10.3 percent from 11.0 percent.
Consumers' expectations for inflation in the coming 12 months held steady this month at 5.6 percent.
(Reporting by Steven C. Johnson; Editing by Chizu Nomiyama)