One would expect consumers to be a little more cautious with the looming threat of the fiscal cliff, but as of now consumers don't seem too worried. For the month of October, Consumer Confidence rose from 73.1 to 73.7, which was more than expected, as well as the highest monthly reading since February 2008.
Click to enlargeLooking at confidence based on income shows an interesting divergence. The top chart below shows Consumer Confidence for consumers with incomes greater than $50K. During the month of October, confidence among this group actually dropped from a four year high of 91.7 down to 88.0. For consumers with incomes of between $35K and $50K (lower chart), however, confidence actually saw a big jump, rising from 65.3 to 78.3, which for that group is a four-year high.
It is only one month, but it seems as though confidence based on income has taken two different paths since the election. Given the fact that one of the central issues of the election was tax rates on the wealthy, it should not be too much of a surprise that higher income Americans are less confident now that President Obama, who promised to raise taxes on higher income Americans, has been re-elected. Where lower income Americans may be mistaken, however, is the notion that going over the fiscal cliff will only impact higher income Americans. As most readers are aware, no agreement on the fiscal cliff will result in higher taxes for all Americans.