Thomson Reuters/University of Michigan: Politicians to Consumers: Bah Humbug!
ANN ARBOR. Confidence plunged in December as consumers confronted the rising likelihood that political gridlock would push the country over the fiscal cliff. Consumers were more pessimistic about their future finances, and more pessimistic about the outlook for the overall economy and job prospects. One-in-four consumers spontaneously mentioned hearing about prospects for higher taxes when asked to identify what economic news they had heard, the highest level ever recorded. While the Sentiment Index is still well above the August 2011 low associated with the Congressional debate on taxes, spending and the deficit, if no resolution is reached the falloff could easily worsen in the weeks ahead. Discounted prices and record low interest rates have forestalled declines in buying attitudes but consumers are likely to reduce purchases if income or payroll taxes increase in 2013.
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