Consumer Sentiment Plunges
As I have noted here in recent weeks, that is, since Americans’ attention turned from the November elections to the year-end fiscal cliff, the mood of consumers may have reached an important turning point and the latest evidence of that possibility came today.
The Reuters/University of Michigan consumer sentiment index tumbled from a final November reading of 82.7 to just 74.5 in the first of two readings for December, its sharpest decline since last summer when, over a period of six or eight weeks, the debt ceiling debate turned into a crisis.
Though the full-month results will likely change after the final-December reading, the 8.2 point drop ranks as the third worst since the financial crisis and was the largest since a plunge of 8.4 points in August of 2011.
While the current conditions index fell only 0.8 points to 89.9, the expectations component fell 13 points to 64.6 and the deterioration in the 12-month outlook was even more extreme, down 22 points to 75.0.
This follows a recovery high for the Conference Board’s consumer confidence index as detailed here last week, however, the Conference Board report is far less timely than the bi-monthly sentiment index. Importantly, an even more timely measure of the American mood, Gallup’s weekly survey of economic confidence, also indicated a significant late-November decline.