February 01, 2013

Thomson Reuters/University of Michigan: Payroll Tax Hike Narrows Gains in Confidence

According to a survey by Thomson Reuters/University of Michigan, consumer confidence remained largely unchanged from last month at its highest level in five years.

ANN ARBOR. Consumer confidence remained largely unchanged from last month at its highest level in five years. When asked to identify any recent economic news, consumers more frequently made unfavorable references to potential changes in future federal tax and spending pro-grams as well as the inability of the political parties to reach a timely settlement. There have only been five other surveys during the past half century in which more consumers spontaneously mentioned their uncertainty about government policies. Interestingly, the past occurrences were also related to taxes, spending, and the federal deficit: Clinton’s deficit reduction program in 1993 and last summers debt ceiling debate which prompted a drop in the Sentiment Index to 55.8, the fourth lowest level recorded in the long history of the surveys. While consumers remain optimistic, that optimism is contingent on the promise of no higher taxes, except on the wealthy.

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