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The impact of increased payroll taxes is the likely culprit in the decline of consumer optimism, according to the director of The Conference Board, the New York City-based business group.
“Consumer Confidence posted another sharp decline in January, erasing all of the gains made through 2012,” said Lynn Franco, director of economic indicators at The Conference Board. “Consumers are more pessimistic about the economic outlook and, in particular, their financial situation. The increase in the payroll tax has undoubtedly dampened consumers’ spirits, and it may take awhile for confidence to rebound and consumers to recover from their initial paycheck shock.”
The Conference Board Consumer Confidence Index, which had declined in December, fell further in January. The Index now stands at 58.6 (1985=100), down from 66.7 in December, and down from 61.5 a year ago.