NEW YORK, Jan 29 (Reuters) - U.S. consumer confidence dropped in January to its lowest level in more than a year as Americans were more pessimistic about the economic outlook and their financial prospects, according to a private sector report released on Tuesday.
The Conference Board, an industry group, said its index of consumer attitudes fell to 58.6 from an upwardly revised 66.7 in December, falling short of economists' expectations for 64. It was the lowest level since November 2011.
December was originally reported as 65.1.
TOM PORCELLI, CHIEF U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK:
'It seems that consumers are responding to their lower paychecks. It is surprising how many people were unaware of the fact that lower paychecks were coming. This number is a reflection of that. More broadly this report nicely captures why we think the first quarter economy will be down.'
JOSEPH TREVISANI, CHIEF MARKET STRATEGIST, WORLDWIDEMARKETS, WOODCLIFF LAKE, NEW JERSEY:
'It's quite and oddity. There is a serious split between the attitudes of consumers and the attitudes of the markets. This may make for a weaker dollar as it makes it less likely the Fed will contemplate an early removal of QE.'
CARY LEAHEY, SENIOR ADVISOR, DECISION ECONOMICS, NEW YORK:
'The number is disappointing but, unfortunately, consistent with the Reuters/University of Michigan survey released earlier this month. The drop here is quite substantial, and more than expected.
'People's expectations worsened. That index has fallen over 20 points since November. The present situation index hasn't changed very much. This does make one concerned that despite the bulk of economic data being supportive, with decent income and hiring gains and not a bad Christmas selling season, people certainly are nervous. This may be the first reflection we're seeing of the loss of the payroll tax credit. For a typical family that's worth about $1,000 which is a huge amount of money.
'Most forecasters are looking for GDP growth in the first quarter or two of 2013 to be not much better than 1.5 percent and that's not much better than the 2012 fourth-quarter GDP reading due tomorrow which is expected to be around 1 percent.'
DAVID SLOAN, ECONOMIST, 4CAST LTD, NEW YORK:
'It was declining before the fiscal cliff deal and it has declined even more rapidly after the fiscal cliff deal. Consumers are probably pretty unhappy to notice that their payroll taxes have gone up.
'There was a lot of debate over whether taxes for the rich would go up or not, and people never really discussed the fact that payroll taxes were definitely going up -- that probably made people unhappy, and there was probably a sense of a dysfunctional government. It seems like the present situation has taken the bulk of the hit and employment projections are less optimistic, which is significant.'
MICHAEL WOOLFOLK, SENIOR CURRENCY STRATEGIST, BNY MELLON, NEW YORK:
'The market's ignoring it. The Dow fell 10-15 points but quickly bounced back. Judging from the behavior of the euro-dollar, we're still very much in risk-on mode.
'It's true that higher payroll taxes are going to impact us today and tomorrow, and that's why some economists have lowered GDP forecasts for the first half. So the data is important, but the market is ignoring bad data right now and looking for excuses to take the market higher.'
CRAIG DISMUKE, CHIEF ECONOMIC STRATEGIST, VINING SPARKS, MEMPHIS, TENNESSEE:
'This is a reflection of the increase of the payroll tax with the tax holiday going away. This is a big concern. This could cut 0.5 percentage point off first-quarter GDP. This is not a disaster on growth but it has hurt confidence. This might bounce back pretty quickly as people get used to a smaller paycheck. Right now, it's a sticker shock.'
STOCKS: U.S. stocks pared gains
BONDS: U.S. bond prices were modestly higher ahead of a debt action later and a two-day Federal Reserve meeting which will end on Wednesday
FOREX: The dollar still lower overall
(Americas Economics and Markets Desk; +1-646 223-6300)
Keywords: USA ECONOMY/INSTANT
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