US: Bloomberg Consumer Comfort Index

Thu Jan 22 08:45:00 CST 2015

Actual Previous
Level 44.7 45.4

According to Bloomberg, Americans' expectations for the economy improved in January to reach the highest level in four years as the cost of gasoline continued to fall and the job market strengthened.

A measure tracking the economic outlook rose by 2 points to 53, the strongest since January 2011, data from the Bloomberg Consumer Comfort Index showed Thursday. Thirty-six percent said the economy is getting better, up from 32 last month and the second-largest share since 2002. The weekly sentiment index eased to 44.7 in the period ended Jan. 18 from 45.4.

The brighter outlook for the world's largest economy was paced by gains among women, full-time workers, 18- to 34-year-olds, residents in the West and Democrats. Married adults and those with at least some college education also registered advances.

While the weekly measure of confidence dropped, it was the second-strongest in seven years. The comfort index averaged 44.8 in 2007, the last year of the past expansion.

All three sub-indexes cooled last week. A gauge on the current state of the national economy decreased to 38.9 from 39.1. A measure of personal finances fell to 56.6 from 57.4, and the buying climate index declined to 38.5 from 39.9.

Comfort gauges for almost every income group showed a decrease last week, with confidence among those making less than $15,000 a year at its lowest in five weeks. Sentiment among Americans earning $100,000 or more advanced from the prior period.

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.