WASHINGTON — U.S. consumer confidence plunged in January to its lowest level in more than a year, reflecting higher Social Security taxes that left Americans with less take-home pay.
The Conference Board said Tuesday that its consumer confidence index dropped 8.1 points in January from December to a reading of 58.6, the lowest since November 2011.
The index has declined for three straight months since hitting a nearly five-year high of 73.1 in October 2012. It's still above the post-recession low of 40.9 reached in October 2011.
Conference Board economist Lynn Franco said the tax increase was the key reason confidence tumbled in January.
For a worker earning $50,000 a year, take-home pay will shrink this year by about $1,000.
The index fell sharply in December as congressional Republicans and President Barack Obama moved closer to the fiscal cliff without reaching a resolution on sharp spending cuts and tax increases.
Congress and the White House ultimately struck a deal on Jan. 1 to prevent income taxes from rising on most Americans. But they delayed the spending cuts for only two months. And they allowed a temporary cut in Social Security taxes to expire.
The survey was conducted through Jan. 17, at which point most people began to realize their paychecks were lighter.