US: Bloomberg Consumer Comfort Index

Thu Mar 26 08:45:00 CDT 2015

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Level 45.5 44.2

Consumer confidence climbed last week to match the second-highest level since July 2007, propelled in part by gains among lower-income earners and job seekers as the labor market improves.

The Bloomberg Consumer Comfort Index rose to 45.5 in the period ended March 22 from 44.2 the prior week. Measures of the economy, buying climate and households' financial well-being all improved.

Spirits brightened for those making less than $50,000 a year in wake of bigger February job gains in services that include the retail and restaurant industries. More confidence about finances signals consumers may be inclined to step up purchases and drive the economy after a projected slowdown in the first quarter.

The index was "bolstered by improved ratings of personal finances, gains among women and improvement among lower- and lower-middle income Americans that may signal a widening recovery," Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg, said in a statement.

Among the three components of the Bloomberg comfort index, the gauge of Americans' views on the state of the economy rose to 37.7 last week from 37.2. An index of the buying climate, showing whether this is a good time to purchase goods and services, increased by 1.5 points to 39.8, matching the second-highest reading since April 2007. A measure of personal finances climbed to 58.9 from 57.1.

Confidence improved for three of four groups of wage earners making less than $50,000 a year. Sentiment among Americans making $25,000 to $40,000 was the strongest since February 2007.

Women were more optimistic than at any time since July 2007, while confidence among seniors, the unemployed and renters was the highest since the start of the last recession. The comfort index for Democratic voters was the highest in 14 years.

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.