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.
Downtown retail in high demand
Pleasanton Bakery owner Jonathan St. Hilaire recognizes the value of a downtown Traverse City retail outlet.Continued ...
Sports business nets new owners
Dave and Lin Harvey have seen a lot in their 32 years in the sporting goods business. The owners of Dave Harvey’s Athletic Supply, 901 S. Airport, witnessed hockey rinks in the Traverse City area come and go.Continued ...
Fred Goldenberg: Putting the 'pot' in 'potholes' and other ideas
Michigan legislators are increasingly discussing the prospects of legalizing marijuana in the state for recreational purposes.Continued ...
Cargazing: Soul is still stylin'
If there was an award for the vehicle that offers the most style per dollar, this car — the Kia Soul — would be a top contender.Continued ...
Ag Forum: Homeowners, farmers and stewardship
The Grand Traverse region is renowned for its scenic landscapes framed by breathtaking views of crystal clear bays. These views and the sparkling-clean water bring visitors to this area every year and create a competitive market for waterfront property.Continued ...
Futures File: California drought drives dairy higher
Milk futures are near an all-time high as California suffers through a severe drought that is threatening dairy production.Continued ...
- Friday, March 7, 2014
Passengers wrongly told TC airport was ‘closed’
Len Price and his family just wanted to get home. The Traverse City resident, 72, his wife, Linda, and son Logan were headed home from a Montana skiing vacation March 1 when weather caused long delays to their United Airlines flight.Continued ...
Building Permits: 03/07/2014
Building permits issued in Grand Traverse County:Continued ...
The Record: 03/07/2014
Assumed names issued in Grand Traverse County:Continued ...
- Thursday, March 6, 2014
Aviation agreement takes off
Will Bennett doesn’t want to spend his future saddled to a desk from 9-to-5 every day. It’s one reason he’s training to be a pilot in Northwestern Michigan College’s Aviation Program.Continued ...
Cadillac manufacturer to make pallets
A northern Michigan business will benefit from a $133 million contract with the United States Air Force.Continued ...
Corps of Engineers to dredge Leland harbor
The U.S. Army Corps of Engineers will spend $25 million on navigation projects in the Great Lakes, including dredging of harbors choked with silt because of low water levels.Continued ...
- Wednesday, March 5, 2014
Rare Bird Brewpub readies for flight
Nate Crane and Tina Schuett spent nearly two years chasing their dream of opening a brew pub in the midst of Traverse City’s craft beer boom.Continued ...
Brewery boom 'capitalism at its best'
Northern Michigan’s flood of brewer-entrepreneurs is prompting some business experts to wonder when the next batch of beer is just too much suds.Continued ...
Glenn Puit: Welcome to our new section, the Biz
Business matters. That’s the driving philosophy behind our new business section, The Biz, which the Record-Eagle launched this morning.Continued ...
Events North enjoys upward climb
Allison Beers lost her job six years ago when the Great Recession hit. It turned out to be a good thing.Continued ...
Business crowdfunds for support
Charlie McDaniel sees every donation as one more person who believes in his business. “If people want a natural foods store in Frankfort, they need to support it,” McDaniel said.Continued ...
Laura Galbraith: Demand for development resources high
One of the eye-opening experiences from the distribution of funds from the dissolution of the Leelanau County Economic Development Corp. was the overwhelming response from Leelanau-based businesses.Continued ...
Business Memoranda: 03/05/2014
The Bank of Northern Michigan announced three promotions and two new hires for their Traverse City office:Continued ...
BIZ in Brief: 03/05/2014
Garfield considers development project; Magna planning expansion; Dealership helps employee. (Plus more)Continued ...
Cherry Capital Foods wins small business award
Cherry Capital Foods gained an edge in winning a regional business award thanks to a staff that rallies around a fundamental mission, one of its leaders said.Continued ...
Guidelines for Record-Eagle business coverage
We realize how important media coverage of a business can be and we are greatly expanding our business coverage at the Record-Eagle. We try to establish a level playing field for everyone and the best way to do that is to work within a set of guidelines.Continued ...
- Tuesday, March 4, 2014
Carry-on crackdown: United enforces bag size limit
United Airlines is getting tough on passengers with oversized carry-on bags.Continued ...
- Sunday, March 2, 2014
Some Front Street businesses rise above it all
Corbin Design employees see their hard work pay off when they peer out their third-floor office windows in downtown Traverse City.Continued ...
Paid parking may increase
Paid parking hours may increase in downtown Traverse City’s Larry C. Hardy Parking Deck.Continued ...
- Downtown retail in high demand