Consumer sentiment falls sharply in December

Consumer confidence fell in December on concerns over looming tax and spending issues. 

This month's sentiment index dropped to 74.5 from 82.7, the lowest level in four months, according to the preliminary gauge reported Friday by Thomson Reuters/University of Michigan.

Despite uncertainty surrounding the "fiscal cliff" of tax hikes and spending cuts, consumers had remained mostly upbeat.

But Congress and the White House are at an impasse with only 18 days until Christmas and time running out to reach a deal before year's end. 

The gauge that measures expectations for six months down the road dropped sharply to 64.6 from 77.6 in October, as concerns remain about the economy, jobs and, in turn, their pocketbooks. 

"One in four consumers spontaneously mentioned hearing about prospects for higher taxes when asked to identify what economic news they heard," said Richard Curtin, chief economist for the survey, in a statement. 

"The only other survey during the past half century that recorded such heightened concerns about fiscal policy was during the disastrous debt ceiling debate in 2011."

Still, consumers feelings about their current situation and whether they could make pricier purchases such as cars, fell only slightly to 89.9 from 90.7. 

Looking 12 months ahead, consumers' expectations also plunged to 75, down 22 points.