The Thomson Reuters/University of Michigan Survey of Consumers showed confidence over the economy increased just 0.1 percent from October to November, hitting 82.7 on the Index of Consumer Sentiment. Preliminary data released earlier in November put the index at 84.9, and economists polled by Reuters expected a median index of 84.5.
As budget negotiations begin on Capitol Hill, it seems Americans are growing more concerned about looming tax increases and spending cuts.
“When asked to identify any recent economic news, consumers more frequently made unfavorable references to potential changes in future federal tax and spending programs as well as the inability of the political parties to reach a timely settlement,” a release issued with the survey said.
The November survey is one of only a handful in the past half century in which more consumers “spontaneously mentioned their uncertainty about government policies.” Other past occurrences were also related to taxes, spending, and the federal deficit. While consumers remain optimistic—the index is at its highest level in five years—“that optimism is contingent on the promise of no higher taxes, except on the wealthy.”
While the overall Sentiment Index was slightly above October’s 82.6 (and well above November 2011’s 63.7), the Expectations and Current Conditions sub-indexes moved in opposite directions: The Expectations Index slipped to 77.6 from 79.0 in October, while the Current Conditions Index rose to 90.7 from 88.1. Both components were well above last November.
In addition, more households reported gains in personal finances in November’s survey than in any other survey since March 2008. Although a slightly larger number reported worsening finances, Americans seem to be much better off than they were in November 2011, when worsening finances were reported twice as frequently as improving financial situations.
Anticipated economic gains also boosted consumer expectations about the job market. The survey recorded the most favorable outlook for the unemployment rate since 1984, with nearly one-third of consumers saying they expect a lower unemployment rate in the coming year.
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