Consumer confidence dropped during December as measured by both the Consumer Sentiment Index and the Consumer Confidence Index. I track the average of the two measures. The resulting Consumer Optimism Index dropped from a 2012 high of 77.9 during October to 69.0 during December. However, that was entirely caused by a plunge in the expectations component of our composite index to 65.2, the lowest since November 2011. The present situation component rose last month to 74.9, the highest since April 2008!
Obviously, consumers last month perceived that the economy was performing well, but feared falling off the fiscal cliff. Now that the cliff has been averted, the resulting relief should boost both confidence and the economy. I am especially encouraged by the drop in the “jobs hard to get” response in the survey conducted by the Conference Board. It suggests that the unemployment rate might continue to fall much faster than widely expected, especially at the Fed.
Today's Morning Briefing: Fiscal Lift? (1) The flinch that stole Christmas. (2) Another apocalyptic scenario postponed. (3) Rooting for three round numbers: 1465/1565/1665. (4) The curmudgeon and smiley do a deal. (5) Another cliff in March. (6) Grover’s spin. (7) From fiscal cliff to fiscal drag to fiscal lift. (8) Some uplifting data on GDP, consumer spending, confidence, and profits. (9) “Hyde Park on the Hudson” (+). (More for subscribers.)