Americans' outlook on the economy and their finances took a turn for the worse in early December due likely to anxiety about the potential for higher taxes resulting from contentious discussions in Washington over fiscal issues, a survey released on Friday showed.
The Thomson Reuters/University of Michigan's preliminary reading of the overall index on consumer sentiment plunged to 74.5 in early December, the lowest level since August.
It was far below November's figure of 82.7 and the median forecast of 82.4 among economists polled by Reuters.
"It seems that the average household is now paying attention to the fiscal cliff and that is the key takeaway from this report," said Tom Porcelli, a chief U.S. economist at RBC Capital Markets. "In recent months it surprisingly held up well even with the fiscal cliff headlines, but with the media picking up on the fiscal cliff even more people are now paying attention to it and the pullback in confidence is a reflection of that.''
Following the report, U.S. stocks pared gains and bond prices slightly cut losses. Meanwhile, the dollar held gains versus yen and euro.