No Consumer Confidence Bounce From Cliff Deal

We (and lots of other observers) were wrong. Most of us expected consumers would gain back a bit of their confidence from the AmericanTaxpayer Relief Act passed just after the New Year. But no.

The Thomson Reuters/University of Michigan Consumer Sentiment Index fell again in the January preliminary reading released last Friday, Jan. 18. The index fell to 71.3 from the final December measure of 72.9. It was the lowest reading on sentiment since December 2011. And it was significantly below the forecast of economists polled by Reuters. They had expected a reading of 75.

“The most unique aspect of the early January data was that an all-time record number of consumers—35%—negatively referred to the fiscal cliff negotiations,” said UM Surveys of Consumers Chief Economist Richard Curtin. And he worried that the debt ceiling debate would erode confidence further.

Of course, he made that statement before House Republicans agreed to pass an extension of the debt ceiling for three months.