US: Bloomberg Consumer Comfort Index

Thu Feb 12 08:45:00 CST 2015

Actual Previous
Level 44.3 45.5

According to Bloomberg, consumer confidence declined for a second straight week, again interrupting a four-month surge as Americans' perceptions of their finances and the economy waned.

The Bloomberg index of consumer comfort retreated to a five-week low of 44.3 in the period ended February 8 after dropping to 45.5 the prior week, the first back-to-back decline since September. Even with the recent setback, the gauge of sentiment is hovering close to the highest level since July 2007.

A fluctuating stock market and rebounding gasoline prices since the end of January are probably keeping confidence from advancing further. At the same time, increased employment opportunities and signs of a pickup in wage growth point to sustained gains in consumer spending, which accounts for about 70 percent of the economy.

"It's a pause from the party," said Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg. "That said, this week's result is better than any of the index's weekly readings from mid-October 2007 through the end of 2014."

The Bloomberg measure for the state of the national economy fell to a five-week low of 38.1 from 39.9. The index for personal finances declined to 57.4 from 59.2. The gauge for whether it is a good time to make purchases also decreased, to 37.2, the lowest since November, from 37.5.

By region, a gauge of sentiment among Americans in the South fell 4 points, the most since October 2013, to a six-week low of 40.1. Confidence in the Midwest also declined. It increased in the Northeast and West.

Comfort among the lowest income earners fell last week, while those at the upper end of the scale were more upbeat. For those making $75,000 to $100,000 a year, the gauge of confidence climbed 5 points to the highest level since July 2007. Sentiment among Americans earning less than $15,000 was the weakest this year.

Last week's drop in comfort extended to almost every age group. The biggest decline was among 35-to-44 year olds. An improving job market may be giving part-time employees optimism that they can find full-time jobs. Sentiment among part-time workers increased for the first time in four weeks.

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.