It looks like Americans are starting to doubt that the economy in 2012 will be that much better than it was last year.
Consumer confidence fell in January after two straight months of big gains as Americans became more worried about their incomes, rising gas prices and overall business conditions, a private research group reported.
The Conference Board said Tuesday that its Consumer Confidence Index is at 61.1, down from a revised 64.8 in December. That comes after the index rose by more than 20 points last month from 40.9 in October amid growing signs of an improving economy.
Economists watch the confidence numbers closely because consumers' spending accounts for about 70 percent of U.S. economic activity. A reading of 90 indicates a healthy economy, a level that hasn't been reached since the recession began in 2007. The current reading shows how quickly Americans' confidence can wane in the still-fragile economy.
"Optimism was getting a little bit ahead of itself," said Mark Vitner, an economist at Wells Fargo. "This is really a sober view after folks got a little excited at the turn of the year, thinking that 2012 would be a much better year. But things haven't gotten much better." The index, based on a survey of shoppers conducted from Jan. 1 through Jan. 19, measures such issues as how shoppers feel about overall business conditions to how hard it is to find a job.
One gauge of the index, which measures how shoppers feel now about the economy, fell to 38.4 from 46.5. The other gauge, which measures shoppers' outlook over the next six months, declined to 76.2 from 77 in December.
"Consumers' assessment of current business and labor market conditions turned more downbeat," said Lynn Franco, director of The Conference Board Consumer Research Center in a statement.
Americans have reasons to be cautious in their optimism. The jobless rate is at the lowest level in nearly three years, but it's still at a high 8.5 percent. Economists predict that 155,000 more net jobs were created in January, but the unemployment rate is expected to be the same. The government releases the job figures for January Friday.
And consumers still are worried the weak housing market. U.S. home prices fell for a third straight month in nearly all cities tracked by a major index. Prices dropped in November from October in 19 of the 20 cities tracked, according to the Standard & Poor's/Case-Shiller home-price index released Tuesday
The index underscores those concerns. The proportion of consumers expecting an increase in their incomes declined to 13.8 percent from 16.3 percent. Worries about inflation ticked up, and shoppers cut back spending plans over the next six months for big purchases like automobiles, homes, and major appliances like refrigerators and TV sets, according to the survey.
"The biggest concern is that incomes are not keeping pace with inflation, and that's causing (shoppers) to look at every expenditure," Vitner said..