NEW YORK (CNN/Money) - A closely watched measure of consumer confidence in the United States fell in January, a published report said Friday, coming in weaker than analysts had expected.
The University of Michigan's consumer sentiment index fell to 83.7 from 86.7 in December, according to a Reuters report. Economists, on average, expected a reading of 87.0, according to Briefing.com.
The news, combined with a disappointing report from the Federal Reserve on December industrial production and an earnings warning from software maker Microsoft (MSFT: Research, Estimates), helped drive down U.S. stock prices, while Treasury bond prices rose.
Consumer confidence is closely watched by economists and policy-makers because consumer spending makes up more than two-thirds of the U.S. economy.
In the Michigan sentiment survey, which is available only to paying subscribers, the expectations index, which measures how consumers think the economy will be in the future, dropped to 75.2 from 80.8 in December, according to Reuters. The current conditions index rose to 96.9 from 96 in December, Reuters said.
Worried consumers tightened their purse strings during the holiday shopping season, making it, by one measure, the worst holiday for retailers in 30 years.
Concerns about the economy prompted the Fed to cut its target for short-term interest rates last year, and President Bush has proposed a $674 billion package of tax cuts and spending that he believes will stimulate the economy -- and help him avoid the fate of his father, who lost a bid for re-election in 1992 in part because he was seen as being unconcerned about the economy.