The Conference Board's Consumer Confidence Index dropped six points for the month of December, down to a reading of 65.1, from November's mark of 71.5, according to information released today.
December's reading marks the second consecutive decline and the lowest point since August, with the fiscal cliff approaching fast. The Expectations Index also declined for the month, falling a more drastic 14.4 points from 80.9 to 66.5.
The fiscal cliff can be blamed for some of the downturn, according to Lynn Franco, The Conference Board's director of economic indicators. Franco is quoted in the organization's news release as saying "The sudden turnaround in expectations was most likely caused by uncertainty surrounding the oncoming fiscal cliff. A similar decline in expectations was experienced in August of 2011 during the debt ceiling discussions."
The Index's release matched the activity of the market's "fear index," or the CBOE Volatility Index (VOLATILITYINDICES: ^VIX ) , today. As of this writing, the VIX had surged more than 5% during Thursday trading to extend its strongest six-day run since May, matching consumer and investor pessimism in the short-term future.
According to The Conference Board, the percentage of consumers expecting improving business conditions in the next six months decreased to 17.6% percent from 21.3% percent, while those expecting business conditions to worsen increased to 21.5% from 15.8%.
Consumers’ outlook for the labor market also turned more pessimistic with those anticipating more jobs in the months ahead declining to 17% from 19.5%. The proportion of consumers expecting an increase in their incomes was virtually unchanged at 15.4%. However, those expecting their incomes to decline rose to 18.7% from 15.6%.