Fiscal Cliff Whacks Consumer Confidence and Stocks
The results echo the final December reading on the Thomson Reuters/University of Michigan’s index on consumer sentiment, which hit its lowest level since July. In addition to the fiscal cliff, many Americans are facing longer-term concerns. Average hourly earnings at private employers have dropped almost every month on an inflation-adjusted basis since February 2011, according to Bloomberg and data from the Labor Department. The only exception was July, when real wages were flat.
Stocks declined across the board with the latest update on consumer confidence and the fiscal cliff. The Dow Jones Industrial Average fell more 100 points in mid-day trading and logged its fourth consecutive loss. Every blue-chip traded in the red at some point on Thursday, with Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM) and Cisco Systems (NASDAQ:CSCO) leading the way. Meanwhile, the S&P 500 and Nasdaq both suffered their biggest single-day decline since November 14. All three major indices closed with losses, but bounced back from intra-day lows.
Hopes of reaching a fiscal cliff deal before the end of the year appear to be diminishing by the day. Senate Majority Leader Harry Reid said it “looks like” Congress will not reach a deal in the remaining days of 2012. “It looks like that’s where we’re headed,” he said. “I don’t know, time-wise, how it can happen now.” Reid also went on to accuse House Speaker John Boehner of running a “dictatorship.” However, in typical last minute fashion, reports indicate that the House of Representatives will reconvene Sunday night, providing some hope for a deal before January.
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