Tuesday, May 21, 2013
The Associated Press
(Continued from page 1)
In this Wednesday, Dec. 12, 2012, photo, a couple descend an escalator while shopping at an H& M store, in Atlanta. U.S. consumer confidence tumbled in December, driven lower by fears of sharp tax increases and government spending cuts set to take effect next week. The Conference Board said Thursday that its consumer confidence index fell this month to 65.1, down from 71.5 in November. That's second straight decline and the lowest level since August. (AP Photo/David Goldman)
And the Commerce Department said new-home sales rose in November at the fastest pace in 2½ years, further evidence of a sustainable housing recovery.
While a short fall over the cliff won't push the economy into recession, most economists expect some tax increases to take effect next year. That could slow economic growth.
The drop in consumer confidence in December comes as retailers are wrapping up a holiday shopping season where consumers have spent more cautiously than expected. Consumer spending drives roughly 70 percent of economic growth.
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.