US: Bloomberg Consumer Comfort Index

Thu Jan 08 08:45:00 CST 2015

Actual Previous
Level 43.6 42.7

Americans' confidence rose last week to the highest level in more than seven years, bolstered by persistent declines in gasoline prices and a steadily improving job market.

The Bloomberg Consumer Comfort Index increased to 43.6 in the week ended Jan. 4 from 42.7 the period before. The advance was led by rosier views of the economy and personal finances.

According to Bloomberg, improvements in sentiment in eight of the last 10 weeks will probably support further gains in household spending, helping drive the U.S. expansion as overseas economies struggle.

The measure of Americans' views on the current state of the economy climbed to the highest level since September 2007. The gauge rose to 36.2 from 35.2 the week before. The index of personal finances rose to a six-week high of 55.5 from 53.8. The buying-climate gauge, which shows whether now is a good time to spend, was little changed at 39.2 from 39 the week before.

The overall comfort index averaged 36.7 in 2014, the highest in seven years.

Sentiment last week rose in four of seven income brackets, with those making $75,000 to $100,000 seeing the biggest improvement as their confidence gauge rose to an almost eight-year high of 64.9 last week from 58.9. Households making $50,000 to $75,000 suffered the biggest drop in sentiment.

Among regions, only the Northeast posted a decline in confidence, falling to 42.4 from 43.7. Confidence in the West climbed to a seven-year high.

The Bloomberg Consumer Comfort Index is a weekly, random-sample survey tracking Americans' views on the condition of the U.S. economy, their personal finances and the buying climate. The survey was formerly sponsored by ABC News since 1985. Beginning in April 2014, immediate details of the report are available by subscription through Langer Research Associates which conducts the survey for Bloomberg. Publicly released details are available only after a significant delay after release of the headline number. In May 2014, Bloomberg changed the series range to zero to 100 versus earlier reports with a range of minus 100 to plus 100.

The pattern in consumer attitudes can be a key influence on stock and bond markets. Consumer spending drives two-thirds of the economy and if the consumer is not confident, the consumer will not be willing to spend. Confidence impacts consumer spending which affects economic growth. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth. Since consumer spending accounts for such a large portion of the economy, the markets are always eager to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. It is easy to see how this index of consumer attitudes gives insight to the direction of the economy. The Bloomberg Consumer Comfort Index is produced by Langer Research Associates of New York. Each release includes results among 1,000 randomly selected adults, with breakdowns available by age, race, sex, education, political affiliation and other groups. The Index has significant long-term correlations, including on a time-lagged basis, with a variety of key economic indicators. The index, produced by Langer Research Associates in New York, is derived from telephone interviews with a random sample of about 250 consumers a week aged 18 or over, and is based on a four-week moving average of 1,000 responses. The percentage of households with negative views on the economy, personal finances and buying climate is subtracted from the share with positive outlooks. The results can range from zero to 100. Prior to May 2014, the data were reported in a range of minus 100 to plus 100.