US: Bloomberg Consumer Comfort Index

Thu Feb 19 08:45:00 CST 2015

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Level 44.6 44.3

Consumers are more upbeat about the U.S. economic outlook than at any time in the last four years, bolstered by cheap gasoline and a sustained pickup in hiring.

The Bloomberg Consumer Comfort Index's monthly economic expectations gauge rose by 1 point to 54 in February, the highest since January 2011. The weekly index was little changed at 44.6 in the period ended February 15 compared with 44.3 the previous week.

Household sentiment has climbed in recent months as fuel prices plunged and payroll gains accelerated. Now that energy costs have stabilized, it will probably take a pickup in wages for American consumers to keep feeling optimistic.

The weekly measure of Americans' views on the current state of the economy climbed to 38.9 from 38.1 the previous period. A gauge of the buying climate, which shows whether now is a good time to purchase goods and services, rose to 38.4 from 37.2. The personal finances index, still the strongest of the three components, fell to a four-week low of 56.6 from 57.4.

Some 26 percent of Americans surveyed this month said the economy is getting worse, the least since January 2011. Thirty-five percent said it's getting better.

More employment opportunities are helping quell pessimism as payrolls in January capped their best three months of job growth in 17 years. Still, wages have been slow to rise, meaning that some consumers who have come to count on savings from low gas prices may be pinched as costs start to rebound.

The average price of a gallon of regular gasoline was $2.27 on February 17, up from an almost six-year low of $2.03 on Jan. 25. That compares with an average price of $3.33 over the past five years.

According to Bloomberg, cheap gasoline is especially important to lower-income households, who tend to spend a greater share of their earnings than their wealthier counterparts.

The weekly measure of sentiment rose in five of seven income brackets. Attitudes for those making $25,000 to $40,000 were the most positive since December 2007, while those making $40,000 to $50,000 suffered the biggest decline, falling to a seven-week low.

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.