Americans’ outlook on the economy and their finances took a turn for the worse in early December due likely to anxiety about the potential for higher taxes resulting from contentious discussions in Washington over fiscal issues, a survey released on Friday showed.
The Thomson Reuters/University of Michigan’s preliminary reading of the overall index on consumer sentiment plunged to 74.5 in early December, the lowest level since August.
It was far below November’s figure of 82.7 and the median forecast of 82.4 among economists polled by Reuters.
“Confidence plunged in early December as consumers confronted the rising likelihood that political gridlock would push the country over the fiscal cliff,” survey director Richard Curtin said in a statement. He was referring to concerns of an economic contraction next year if the White House and Congress fail to reach a budget pact by year-end.