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Financial fears hit consumer confidence in Jan. 

Consumer confidence dropped in January to its lowest level in more than a year as Americans were more pessimistic about the economic outlook and their financial prospects, according to a private sector report released on Tuesday. 

The Conference Board, an industry group, said its index of consumer attitudes fell to 58.6 from an upwardly revised 66.7 in December, falling short of economists' expectations for 64. It was the lowest level since November 2011. 

The index for December was originally reported as 65.1. 

At the start of the year, U.S. politicians came to an agreement that averted the so-called fiscal cliff of spending cuts and tax increases that had been set to come into effect. 

But the deal did raise taxes for many Americans and a number of budget decisions still remain. 

"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," Lynn Franco, director of economic indicators at The Conference Board, said in a statement. 

The expectations index tumbled to its lowest level since October 2011 at 59.5 from 68.1. The present situation index slipped to 57.3 from 64.6. 

Consumers' views on the labor market were also weaker. The "jobs hard to get" index rose for the first time since September to 37.7 from 36.1 the month before. The "jobs plentiful" index fell to 8.6 from 10.8. 

Consumers expected higher price increases with expectations for inflation in the coming 12 months rising to 5.7 percent from 5.6 percent.