Consumer confidence in US down sharply

SILVER SPRING, MD. » A closely-watched gauge of U.S. consumer confidence tumbled in December as rising coronavirus cases dragged American optimism to its lowest level since the summer.

However, rising pessimism is now spreading during the crucial holiday season, which could make or break a number of retailers, airlines, restaurants and other sectors that have been hammered financially during the pandemic.

The December reading of 88.6 released Tuesday by the Conference Board is a sharp decline from last month, which was revised down to 92.9, and it is worse than economists had expected.

It may be an ominous sign for an economy in which consumer spending accounts for 70% of all economic economic activity.

The Commerce Department reported last week that U.S. retail sales fell a seasonally adjusted 1.1% in November, the biggest drop in seven months, and also worse than most were expecting. The drumbeat of weak economic data may be providing a grim preview of Christmas receipts, which can account for a quarter or more of a retailer’s annual sales.

The index measuring consumers’ assessment of current business and labor market conditions also fell sharply, from 105.9 last month to 90.3 in December. Consumers’ short-term outlook for income, business, and labor market conditions ticked up slightly from 84.3 in November to 87.5 this month, possibly because of recent approvals for COVID-19 vaccines.