Thursday, December 27, 2012

USA Consumer Confidence Drops with Oncoming Fiscal Cliff

The Conference Board: Consumer Confidence Index

(The Conference Board) The Conference Board Consumer Confidence Index®, which had declined slightly in November, posted another decrease in December. The Index now stands at 65.1 (1985=100), down from 71.5 in November. The Expectations Index declined sharply to 66.5 from 80.9. The Present Situation Index increased to 62.8 from 57.4 last month.

Says Lynn Franco, Director of Economic Indicators at The Conference Board: “Consumers’ expectations retreated sharply in December resulting in a decline in the overall Index. The sudden turnaround in expectations was most likely caused by uncertainty surrounding the oncoming fiscal cliff. A similar decline in expectations was experienced in August of 2011 during the debt ceiling discussions. While consumers are quite negative about the short-term outlook, they are more upbeat than last month about current business and labor market conditions.”

Consumer Confidence Index by Month The Consumer Confidence Index (CCI) has reached a Post-Great Recession peak of 73.1 in October 2012. The Great Recession cyclical low was 25.3 in February 2009. The Pre-Great Recession peak was 111.9 in July 2007.

Consumer Confidence Index by Year For each year, the related months are averaged. The Great Recession low was in 2009 at a 45 average and the Post-Great Recession peak is now 2012 at a 5-year high of 67 (preliminary).


Saturday, December 22, 2012

John Williams: America in New Recession in 2013

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John Williams

John Williams of Interview: We're Going to Be in a New Recession in 2013 - John Williams of has long contended the Fed is really just using the weak economy to continue to prop up the banking system. Williams says, "If the Fed wasn't doing what it's doing . . . I'd presume you'd be on the road to a banking system collapse. The banking system is still in trouble." Williams warns the "open-ended" printing of $85 billion a month ". . . will be part of what will eventually become hyperinflation." And if there is no deal on the so-called "fiscal cliff," then Williams expects "heavy selling pressure on the U.S. dollar." Join Greg Hunter of as he goes One-on-One with economist John Williams.

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USA Consumer Sentiment Plunges to 5-Month Low

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USA Consumer Sentiment: Thomson Reuters / University of Michigan

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. While consumers remain optimistic, that optimism is contingent on the promise of no higher taxes, except on the wealthy.

USA Consumer Sentiment by Month

USA Consumer Sentiment by Year

Surveys of Consumers chief economist, Richard Curtin said, "Confidence is lost much more easily than it can be regained, and the pessimism created by not reaching a resolution before year-end will be difficult to reverse even if a settlement is reached soon after the start of 2013. Blaming one side or the other for failure will only increase pessimism as it reflects a dysfunctional system for setting economic policy. Moreover, the details of the settlement matter, as it is hard to imagine a positive reaction if it did not include the extension of the payroll tax cut. While tax hikes on top incomes will result in spending declines, ending the payroll tax holiday will result in significant losses in confidence and spending."


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