US: Bloomberg Consumer Comfort Index

Thu Feb 05 08:45:00 CST 2015

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Level 45.5 47.3

Consumer confidence appears to have edged down despite lower gasoline prices as stocks recently have softened, according to Bloomberg. Confidence still is at healthy levels.

Consumer confidence declined last week from the highest level in more than seven years as Americans' attitudes about their finances ebbed with the stock market.

While the Bloomberg weekly index of consumer comfort fell to 45.5 in the period ended February 1 from 47.3, it was still the second-best reading since July 2007. Measures of the buying climate and views of the economy also lost ground, the figures showed Thursday.

Americans with annual incomes of $100,000 or more saw the biggest decrease in sentiment since February 2014, coming off the worst month in a year for the Standard & Poor's 500 Index. At the same time, job growth and the cheapest gasoline since 2009 are giving households, whose spending accounts for about 70 percent of the economy, more purchasing power.

A gauge of Americans' views on the current state of the economy dropped to 39.9 last week from 42.3. An index of the buying climate, showing whether this is a good time to purchase goods and services, declined to 37.5 from 39. A measure of personal finances fell to 59.2 from 60.7.

Stock market gyrations were reflected most in the moods of those at the top of the wage scale. The comfort gauge for households earning more than $100,000 declined to 67.3 last week from 72.1. The S&P index lost 3.1 percent in January, the biggest drop since a year earlier, on concerns over slowing growth overseas and that a stronger dollar will erode corporate profits.

Comfort increased last week in just one of the seven income groups in the survey. A gauge of those making $50,000 to $74,900 advanced to 55.2 from 54.4 the prior week.

While the comfort measure deteriorated for full-time workers and home owners, it remained above 50, indicating a greater share are optimistic than pessimistic.

Declines in confidence were seen in all four U.S. regions and throughout every age group. However, levels remain healthy.

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.