Consumer confidence in U.S. falls to lowest level since 2011

Labor Market

The number of respondents who said jobs are currently plentiful declined to 8.6% in January from 10.8%. Those who said jobs are hard to get rose to 37.7% from 36.1%.

Increased pessimism about the labor market may be seeping into purchase plans. The share of Americans planning to buy a car in the next six months fell to 10.1%, the lowest since April 2012.

Today’s figures mirror other measures of consumer confidence. The Bloomberg Consumer Comfort Index dropped in the week ended Jan. 20 to the lowest level since early October as Americans’ concerns about the economy mounted.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment dropped in January to its lowest point since December 2011.

These reports also showed that a decrease in take-home pay from the increase in payroll taxes is weighing on attitudes. Americans earning $50,000 a year will take home about $80 less a month after the tax used to pay for Social Security benefits went up to 6.2% from 4.2%.

Budget Debate

While lawmakers avoided broad-based increases in income taxes, Congress is now debating how best to reduce the nation’s budget deficit. Automatic spending cuts are slated to go into effect March 1.

Walgreen Co., the largest U.S. drugstore chain, sees customers who have grown more value conscious.

“Many of our customers are concerned about long-term employment,” Kermit Crawford, president of the company’s pharmacy, health and wellness business, said at a health-care conference on Jan. 7. “They’re concerned about issues such as Medicare and Social Security. They’re concerned about the debt issues. It’s changing the way they think about value. It’s changing the way they shop.”

Employment gains are helping sustain demand. Employers added 155,000 workers in December, according to Labor Department data. For all of 2012, the economy created 1.84 million jobs, matching the gain in 2011. It’s the best back-to-back reading since 2005-2006.

Consumers are also paying less at the gas pump. The average price of a gallon of gas yesterday was $3.36, down from a recent high of $3.87 in September, according to data from AAA, the biggest U.S. motoring organization.

Bloomberg News

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