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A gauge of consumer confidence hits 5-month low

WASHINGTON — Confidence among U.S. consumers has sunk to its lowest point since July, according to a monthly index.

The University of Michigan says its consumer sentiment index for December fell to 72.9, a sharp drop from the November reading of 82.7. The November figure was a five-year high.

Peter Newland, an economist at Barclays, says consumer confidence has dropped because of uncertainty over whether Congress and the Obama administration will reach a budget deal to avert sharp tax increases and government spending cuts set to take effect in January.

Economists said confidence could fall further if the standoff over the “fiscal cliff” persists into 2013. And Peter Curtin, the University of Michigan’s chief economist for the survey, said the loss of public confidence might be slow to recover even if a budget deal is reached early in the new year.

“Confidence is lost much more easily than it can be regained,” Curtin said. “Blaming one side or the other for failure will only increase pessimism as it reflects a dysfunctional system for setting economic policy.”

Chris Christopher, senior economist at IHS Global Insight, said the survey showed that “Americans have become increasingly worried over their personal finances, business conditions and the economic outlook.”

One comment

  1. The best way to increase consumer confidence is to bring the trillions of dollars lost to the government through business fraud across all business sectors back to the people to pay off the $14 trillion national debt. We all recognize that the US economy cannot recover until Rule of Law is reinstated and US citizens and the world has some level of confidence that corporations and Wall Street are not criminal.

    This recovery of fraud will be the next growth industry and job creator as all of the fraud settlement money gathered thus far is used to rebuild all white collar criminal agencies across the country. The movement of trillions of dollars from the defense, finance, health care, and for-profit industries will down-size these business sectors to the regional players we need them to be. This in turn will reset the focus of domestic workers as consumers and the need to rebuild the middle-class will be felt not just by all citizens in America, but then by the corporations as well. A strong middle-class provides strong consumers which drives the economy after all.

    If we the people know that, then why have we elected people who just don’t seem to know the ABCs of economics.

    Then we will have real consumer confidence!!!