The Biggest Question About Today's Dive In Consumer Confidence

Consumer confidence declined to 58.6 from 66.7 in December.

That was well below expectations.

So, the question is simple.

What caused it?

Was it the fact that the payroll tax jumped, and people were reacting to their new, lower take-home pay?

Or was it about DC uncertainty?

Nomura writes:

While the cutoff date of the January survey was January 17, the political agreement on the fiscal cliff did not help consumer sentiment improve. Because we think that many households still have not fully realised the impact of the expiration of the payroll tax holiday as yet, there is the possibility that consumer confidence could decline further in the coming months. The Conference Board said “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.”

Here’s a chart which shows the dive.

Conference Board Consumer Confidence January

Photo: Bloomberg, Business Insider

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.