Following a decline in December, consumer confidence slipped again in January from 66.7 to 58.6, according to the Conference Board Consumer Confidence Index.
"Consumer confidence posted another sharp decline in January, erasing all of the gains made through 2012,” says Lynn Franco, director of economic indicators at the Conference Board. “Consumers are more pessimistic about the economic outlook and, in particular, their financial situation. 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."
Additionally, respondents report feeling worse about current conditions in January, the research finds. In fact, 16.7 percent of respondents believe business conditions are good, a drop from 17.2 percent last month, and 27.4 percent of respondents say business conditions are bad, a slight uptick from 26.3 percent.
Respondents are also more pessimistic regarding the labor market as 8.6 percent say jobs are plentiful, down from 10.8 percent. Another 37.7 percent of respondents say jobs are hard to get, up from 36.1 percent. Only 14.3 percent of respondents expect more jobs to be available in the upcoming months, a decline from 17.9 percent. Twenty-seven percent of respondents believe fewer jobs will be available, which is virtually unchanged from last month. Meanwhile, 22.9 percent of respondents say their pay will fall, an increase from 19.1 percent, and 13.6 percent of respondents expect higher compensation, down from 15.6 percent.
In the short term, 15.4 percent of respondents believe business conditions will improve in the next six months, falling from 18.1. Still, 20.6 percent of respondents say business conditions will worsen, a small dip from 21.1 percent.