US: Bloomberg Consumer Comfort Index

Thu Jan 15 08:45:00 CST 2015

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Level 45.4 43.6

According to Bloomberg, consumer confidence increased last week to the highest level since mid-2007 as steady declines in gasoline prices and more hiring boosted Americans' attitudes about the economy.

The Bloomberg Consumer Comfort Index rose to 45.4 in the period ended January 11, the highest reading since July 2007, from 43.6 the week before. A measure of households' views of the economy was also the strongest in more than seven years.

The improvement comes on the heels of steady job gains, while the cheapest prices at the gas pump since 2009 provide relief to cash-strapped households.

The measure of Americans' views on the current state of the economy climbed to 39.1 last week, the highest level since August 2007, from 36.2 the prior period. The barometer of personal finances, the strongest of the overall index's three components, rose 1.9 points to 57.4, its biggest jump since early November.

A gauge of the buying climate, which shows whether now is a good time to purchase goods and services, rose to 39.9, the strongest reading since April 2007, from 39.2.

Four of seven income brackets experienced confidence boosts last week, paced by those making $50,000 to $75,000, whose sentiment gauge climbed to 51.5 from 45.9. Confidence also rose for those making less than $50,000 as a group.

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.