US: Bloomberg Consumer Comfort Index

Thu Mar 05 08:45:00 CST 2015

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Level 43.5 42.7

According to Bloomberg, consumer confidence in the U.S. rebounded last week from its lowest level of the year as stocks reached record highs, bolstering Americans' wealth.

The Bloomberg Consumer Comfort Index rose to 43.5 in the period ended March 1 from a reading of 42.7 the prior week that was the lowest this year. Measures of the current state of the economy, personal finances and the buying climate advanced.

The gauge of Americans' views on the state of the economy rose to 37.1 last week from 35.7 the previous week. An index of the buying climate, showing whether this is a good time to purchase goods and services, increased to a seven-week high of 39.3, and a measure of personal finances climbed to 54.1 from 53.8.

The S&P 500 rose to fresh records four times in February, and the Dow posted its best month in two years, helping explain why confidence surged among Americans making more than $100,000 a year. The gauge jumped to 69.2 last week, the highest level since the end of January.

Moods worsened for those at the bottom of the wage scale. The comfort gauge for workers earning less than $15,000 a year declined to the lowest since mid-December.

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.