The Consumer Confidence Index continues its downward trend, dropping 12.1% for January, according to a Conference Board report released today. Analysts had expected a slight 2.4% slump, but were left surprised by consumer's assessment of business and labor market conditions. The index dipped to 58.6 in January, from 66.7 in December.
"Consumer Confidence posted another sharp decline in January, erasing all of the gains made through 2012," said Conference Board Director of Economic Indicators Lynn Franco in a statement today. "Consumers are more pessimistic about the economic outlook and, in particular, their financial situation. The increase in the payroll tax has undoubtedly dampened consumers' spirits and it may take a while for confidence to rebound and consumers to recover from their initial paycheck shock."
Drawn from a random sample, only 16.7% of consumers believe business conditions are "good," compared to 17.2% in December. Likewise, opinions of "bad" business conditions bumped up from 26.3% to 27.4% of those surveyed.
Appraisals of the job market also grew increasingly pessimistic. The percentage of consumers believing jobs are "hard to get" bumped up 1.6 percentage points to 37.7%.
Looking ahead, opinions of future business conditions show some signs of hope. Although fewer consumers believe business conditions will improve over the next six months, fewer consumers also predicted that business conditions will continue to worsen.