US: Bloomberg Consumer Comfort Index

Thu Feb 26 08:45:00 CST 2015

Actual Previous
Level 42.7 44.6

As with the Conference Board's consumer confidence report earlier this week, Bloomberg's index showed some slippage in the latest report. Consumer sentiment retreated last week to the lowest level of the year as Americans' views of the economy and their finances dimmed. The Bloomberg Consumer Comfort Index fell to 42.7 in the period ended Februrdary 22 from 44.6 a week earlier. The 1.9-point decline was the biggest since May 2014. A gauge of the current state of the economy slumped by the most in almost four years.

According to Bloomberg, confidence has deteriorated in three of the last four weeks as gasoline prices started climbing from the lowest level since 2009. Sentiment is also being restrained by what Federal Reserve Chair Janet Yellen this week called "sluggish" wage growth, even as the labor market continues to improve.

The measure of Americans' views of the economy dropped 3.2 points, the most since March 2011, to an eight-week low of 35.7. The gauge of personal finances fell to 53.8, also the weakest reading this year, from 56.6. It was the fourth straight decline.

A gauge of the buying climate, which shows whether now is a good time to make purchases, was little changed.

Sentiment declined last week within five of seven income brackets. Confidence among those making less than $50,000 declined to an eight-week low and for Americans making more, sentiment dropped to the weakest since November.

Comfort fell in all four U.S. regions last week. For those in the Midwest, confidence declined more than in any other region and reached the lowest level since November. In the West, sentiment decreased by the most in 12 weeks.

The next report on the consumer mood is the University of Michigan consumer sentiment report tomorrow.

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.