The Conference Board released the latest Consumer Confidence numbers this morning. The Consumer Confidence Index tumbled to 65.1 in December compared to a downwardly revised 71.5 last month.
Consumers are apparently alarmed with the incompetence of their elected officials in Washington. Four days until year-end and the fiscal cliff is still not solved. Higher income earners who are going to take the brunt of the pain from the fiscal cliff reported the biggest drop in confidence. These are the same consumers who account for well over half of all discretionary spending and who own the vast majority of financial assets.
Many of these folk are losing confidence because they believe that their income will fall over the coming six months. According to the Conference Board, 18.7% of consumers now believe their income will be lower in six months than it is today. That is one of the highest readings on record.
The slow economic expansion underway in the U.S. is unlikely to be sustained if Consumer Confidence continues to fall.
