The consumer confidence index slumped to 58.6 in January from an upwardly revised 66.7 last month, The Conference Board reported Tuesday.
The December index was originally reported as 65.1.
The present situation index fell to 57.3 from an upwardly revised 64.6, originally reported as 62.8, while the expectations index fell to 59.5 from an upwardly revised 68.1, originally reported as 66.5.
Economists polled by Thomson Reuters predicted a 64.0 reading for the index.
"Consumer confidence posted another sharp decline in January, erasing all of the gains made through 2012," said Lynn Franco, director of The Conference Board's Consumer Research Center. "Consumers are more pessimistic about the economic outlook and, in particular, their financial situation. The increase in the payroll tax has undoubtedly dampened consumers' spirits and it may take a while for confidence to rebound and consumers to recover from their initial paycheck shock."
Business conditions were called "good" by 16.7% of respondents in January, off from 17.2% in December. Those saying conditions are "bad" rose to 27.4% from 26.3%.
The percentage of consumers expecting a pickup in business conditions in the next half year slid to 15.4% from 18.1%, while 20.6% said they expect conditions to worsen, down from 21.1% the prior month.
On the jobs front, those who believe jobs are "plentiful" dropped to 8.6% in January from 10.8% in December, while the number saying jobs are "hard to get" rose to 37.7% from 36.1%. The respondents who see fewer jobs becoming available in a half year, increased to 27.0% from 26.9%. Those expecting more jobs to become available slipped to 14.3% from 17.9%, The Conference Board reported.
Income expectations were lower, with 13.6% of consumers anticipating an increase in their income in the next six months, off from the prior month's 15.6%, while 22.9% expect their income to decrease, up from 19.1% in the prior month's survey.
The number of consumers who expected to buy a home in the next six months remained at 5.3%, while the number of respondents planning to buy a car decreased to 10.1% from 12.2%. More consumers than last month said they plan to buy a major appliance in the next six months (47.7% vs. 46.1%).
Fewer respondents than last month (49.2% vs. 52.7%) expect to take a vacation in the next six months, but more said they would stay in the U.S. rather than leave the country. Cars rather than airplanes were the preferred mode of travel, by a 26.6%-20.0% margin.
The consumer confidence survey is based on a probability design random sample by the Nielsen Company.