Consumer confidence dips in wake of 'fiscal cliff'

Consumer confidence slid to its lowest level since November 2011 as consumers lowered their expectations for the economy following the "fiscal cliff" debate.

The Conference Board's Consumer Confidence Index dropped for the second straight month in January, dipping to 58.6 from its December level of 66.7. On the index's scale, a score of 100 is meant to reflect the high confidence that came with the 1985 economy.

The decline is more severe than most economists anticipated. Experts surveyed by Bloomberg had estimated that the new numbers would come at a score of 64.

The sharp, two-month dip came at a time when lawmakers were engaged in intense negotiations over the "fiscal cliff," with a potential recession looming over the horizon, and in the immediate aftermath as those policies began to take effect.

Analysts behind the report said that consumers are just now feeling the brunt of policy changes brought on by the fiscal cliff, which could be taking their toll. In particular, the expiration of the payroll tax break is shrinking paychecks nationwide, and apparently taking a bite out of confidence as well.

"Consumers are more pessimistic about the economic outlook and, in particular, their financial situation," said Lynn Franco, director of economic indicators for the board. "The increase in the payroll tax has undoubtedly dampened consumers’ spirits and it may take a while for confidence to rebound and consumers to recover from their initial paycheck shock."

Consumers who say business conditions are "good" fell to 16.7 percent from 17.2, while those with a "bad" outlook climbed to 27.4 percent from 26.3.

When it comes to the labor market, the percentage of consumers who see jobs as "plentiful" fell to 8.6 percent from 10.8 percent, while those who believe a job is "hard to get" jumped to 37.7 from 36.1 percent.

---