US consumer confidence falls as wages take tax hit
Confidence among US consumers declined more than forecast in January, reaching the lowest level in more than a year as higher payroll taxes took a bigger bite out of Americans' paycheques.
The closely watched confidence index decreased to 58.6, the weakest since November 2011, from a revised 66.7 in December. The January reading was lower than the most pessimistic forecast in a Bloomberg survey.
The drop in confidence coincides with a two percentage-point increase in the payroll tax used to fund Social Security, a hurdle for consumers after a projected pick-up in spending in the fourth quarter. The outlook for employment prospects and incomes also deteriorated this month.
"The thing that's particularly troubling is the sizable decline in expectations," said Guy Lebas, a strategist at Janney Montgomery Scott. "As those expectations deteriorate, it doesn't bode particularly well for day-to-day consumer spending."
Another report showed property values increased in November by the most since August 2006. The S&P/Case-Shiller index of home prices in 20 US cities climbed 5.5pc from November 2011, after advancing 4.2pc in the year to October.
The consumer confidence figures show the share of consumers expecting more jobs to become available in the next six months dropped to 14.3pc in January, from 17.9pc the previous month. (Bloomberg)