WASHINGTON (AP) — U.S. consumers peering over the "fiscal cliff" don't like what they see.
Fears of sharp tax increases and government spending cuts set to take effect next week sent consumer confidence tumbling in December to its lowest level since August.
The Conference Board said Thursday that its consumer confidence index fell for the second straight month in December to 65.1, down from 71.5 in November.
The survey showed consumers' outlook for the next six months deteriorated to its lowest level since 2011 — a signal to Lynn Franco, the board's director of economic indicators, that consumers are worried about the tax hikes and spending cuts that take effect Jan. 1 if the White House and Congress can't reach a budget deal.
Earlier this week a report showed consumers held back shopping this holiday season, another indication of their concerns about possible tax increases.
The December drop in confidence "is obvious confirmation that a sudden and serious deterioration in hopes for the future took place in December — presumably reflecting concern about imminent 'fiscal cliff' tax increases," said Pierre Ellis, an economist with Decision Economics.
The decline in confidence comes at a critical time when the economy is showing signs of improvement elsewhere.
A recovery in housing market is looking more sustainable. On Thursday, the government said new-home sales increased in November at the fastest seasonally adjusted annual pace in 2½ years.
And the job market has made slow but steady gains in recent months. The average number of Americans applying for unemployment benefits over the past month fell to the lowest level since March 2008.
But the political wrangling in Washington threatens the economy's slow, steady progress. President Barack Obama and House returned to Washington Thursday to resume talks with just days to go before the deadline.
Mixed signals over those negotiations led to a rocky day on Wall Street.
Stocks plunged early after the weak consumer confidence report and a warning from Senate Majority Leader Harry Reid that the government appeared to be headed over the "fiscal cliff." At one point, the Dow Jones industrial average fell as much as 150 points.
But the market came back in the final hour of trading on a potential sign of movement in the talks: Republican leaders announced they would bring the House back into session on Sunday evening. The Dow recouped nearly all of its losses to close down just 18 points at 13,096.
A short fall over the cliff won't push the economy into recession. But most economists expect some tax increases to take effect next year. That could slow economic growth.
While consumers are more worried about where the economy is headed, they were upbeat about present conditions, according to the latest survey. Their assessment of current economic conditions rose this month to the highest level since August 2008.
A key reason for that is gas prices hit a 2012 low of $3.21 a gallon last week. Normally, that would prompt consumers to spend more on holiday shopping.
But the opposite has happened. A report from MasterCard Advisors Spending pulse indicated sales grew in the two months before Christmas at the weakest rate since 2008, when the country was in a deep recession.
There were other distractions this holiday season. In late October, Superstorm Sandy battered the Northeast and mid-Atlantic states, which account for 24 percent of U.S. retail sales. That coupled with the presidential election, hurt sales during the first half of November.
Shopping picked up in the second half of November. But "fiscal cliff" worries dampened sales in December.
The National Retail Federation, the nation's largest retail trade group, remains optimistic that sales won't be quite as bad as earlier reports have suggested. It is sticking to its forecast for total sales for November and December to be up 4.1 percent to $586.1 billion this year. That's more than a percentage point lower than the growth in each of the past two years, and the smallest increase since 2009 when sales were up just 0.3 percent.
U.S. worried about tax increases and spending cuts
WASHINGTON (AP) — U.S. consumers peering over the "fiscal cliff" don't like what they see.
FINAL: Joliet 5, Traverse City 2
The Traverse City Beach Bums lost their 2013 Frontier League season opener 5-2 to the Joliet Slammers on Friday night.Continued ...
UPDATE: Beach Bums, Slammers tied 1-1 in 4th
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Trojans sweep regional meet
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Prep sports scoreboard: 05/17/2013
A roundup of high school sports results from across northern Michigan:Continued ...
Parking garage rates to rise
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Ex-Traverse City Manager Lewis to head St. Joseph
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Festival spotlights science, math
Newton’s Road, a regional nonprofit organization committed to increasing access to and appreciation of learning opportunities in science, technology, engineering and math, continues its Northern Michigan STEaM Film Festival on Saturday.Continued ...
Heroin overdose kills man
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Gladiators capture tennis regional
St. Francis tennis coach Jeff Hughes juggled his lineup during the season — and it paid off with a Division 4 regional title Thursday at Traverse City Central.Continued ...
Editorial: Obama must set tone for IRS, Justice Dept.
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Couple's film focuses on Latin American coffee farmers
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TCC girls beat Midland, qualify for state finals
Traverse City Central qualified for the girls tennis state finals for the 32nd straight year, handily winning the Division 1 regional at Midland.Continued ...
Beach Bums open tonight against Joliet
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No food truck buffet rolled out on first day
Diners who hankered for food truck fare on the first day the mobile restaurants were allowed downtown came away hungry.Continued ...
Papa Roach is still swingin'
Papa Roach is still producing hit songs. It’s just getting harder and harder to get radio stations to play them.Continued ...
Letters to the Editor: 05/17/2013
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Firings anger Grand Traverse Band members
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One-woman show helps gardens
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Prep Sports Roundup: Schiller throws no-hitter for TC Central
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Weekend in Brief: 05/17/2013
Do the BBQ; Benzie Players; Garage sale. (Plus more)Continued ...
Low-flying helicopters are coming
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Nursing home promises to repay Benzie $484K
The Maples nursing home officials told Benzie County leaders they will repay $484,000 the county loaned the facility by March 2014.Continued ...
Traverse City Light & Power joins SUN project
Traverse City Light & Power board members approved the final step in implementing a community solar project in partnership with Cherryland Electric Cooperative.Continued ...
Sports in Brief: 05/17/2013
Roller derby bouts this weekend; Blue Star hosting baseball tourney; Screening of 'Signals for Survival.' (Plus more)Continued ...
Movie Capsules: 05/17/2013
New this week — Star Trek Into Darkness: After the crew of the Enterprise finds an unstoppable force of terror from within their own organization, Captain Kirk leads a manhunt to a war-zone world to capture a one-man weapon of mass destruction.Continued ...
- FINAL: Joliet 5, Traverse City 2