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Consumer Comfort in the U.S. Falls as Gasoline Prices Climb

May 12, 2011

Press Release

The Bloomberg Consumer Comfort Index Was Minus 46.9 in the
Period to May 8

New York — Consumer confidence fell to a six-week low as the
costliest gasoline in almost three years worsened Americans’
perceptions of their finances.

The Bloomberg Consumer Comfort Index dropped to minus 46.9 in
the period to May 8, the worst reading since March, from the
prior week’s minus 46.2. Across regions, sentiment suffered the
most in the West, where fuel prices exceed the national average.

Households paid almost $4 a gallon at the pump last week, the
most since July 2008. While retailers like Macy’s Inc. have yet
to be hurt by waning confidence, a bigger pickup in jobs and
lower energy expenses would help ensure consumer spending, which
accounts for about 70 percent of the economy, will hold up.

For full CCI results, see:

“Consumers will likely need to observe a steady descent in the
cost of fuel before sentiment will see a sustainable increase,”
said Joseph Brusuelas, a senior economist at Bloomberg LP in New
. Higher energy bills are a “reminder for beleaguered
consumers day to day of what has been a difficult economic

The number of Americans filing first-time claims for
unemployment insurance payments fell less than forecast last
week, a Labor Department report today showed, indicating
recovery in the labor market is taking time to accelerate.

Applications for jobless benefits decreased 44,000 in the week
ended May 7 to 434,000. Economists forecast 430,000 claims,
according to the median estimate in a Bloomberg News survey. The
number of people on unemployment benefit rolls rose, while those
getting extended payments decreased.

Another government report today showed that retail sales rose
0.5 percent in April, reflecting gains at service stations and
grocery stores as fuel and food costs climbed. Sales excluding
autos and gasoline increased 0.2 percent, the smallest gain in
four months.

The survey period for the Bloomberg consumer sentiment gauge was
the first to take into account May 1 news that the U.S. killed
al-Qaeda leader Osama bin Laden. The death of the FBI’s most-
wanted terrorist did little to lift sentiment last week, the
comfort report showed.

“Evidently, the damage to household bottom lines by rising food
and fuel costs, tepid wage gains and an elevated level of
unemployment has trumped the demise of America’s long-time
nemesis,” Brusuelas said.

The Bloomberg comfort gauge reflected a decrease in one of its
three components: the measure of personal finances fell to minus
10.6 last week, the lowest since the first week of February,
from minus 6.9 the prior week.

A gauge of Americans’ views of the economy, at minus 75, was
little changed from minus 75.8 the previous week. The buying-
climate index was at minus 54.9, compared with the previous
week’s minus 56.

The comfort index fell for consumers in the West, matching the
levels reached in mid 2009 as the lowest in records going back
to 1990. Gasoline prices in the region averaged $4.15 a gallon
last week.

Sentiment among younger adults and home renters plunged to the
lowest this year, today’s report showed. The confidence index
for those aged between 18 and 34 fell to minus 54.5 last week.
The measure for Americans renting a home dropped to minus 63.7
from minus 59.8.

The comfort index was higher for Democrats than for Republicans
for a fourth straight week, which has happened only once before,
in 1996. The gauge for Democrats was minus 38.9, up from minus
41.4 four weeks ago. The index for Republicans was minus 46.8,
down from minus 36.5 a month earlier.

“Confidence does tend to rise and fall in step with presidential
power,” Gary Langer, president of Langer Research Associates LLC
in New York, which compiles the index for Bloomberg, said in a

Confidence among Republicans, who as a group tend to have higher
incomes, surpassed Democrats by an average 46.5 points during
the last two GOP administrations, Langer said.

Less confidence has yet to concern retailers. Macy’s, the
second-biggest U.S. department-store chain, yesterday boosted
its 2011 profit forecast after rising sales helped net income to
increase more than fivefold in the three months ended April 30,
from a year earlier. Cincinnati-based Macy’s also doubled its
quarterly dividend.

“We are off to another strong start this year and we have every
expectation it will continue,” Karen Hoguet, chief financial
officer of Macy’s, said on a conference call with investors

The Bloomberg Consumer Comfort Index is based on responses to
telephone interviews with a random sample of 1,000 consumers
aged 18 and over. Each week, 250 respondents are asked for their
views on the economy, personal finances and buying climate; the
percentage of negative responses is subtracted from the share of
positive views and divided by three.

The comfort index can range from 100, indicating every
participant in the survey had a positive response to all three
components, to minus 100, signaling all views were negative. The
margin of error for the headline reading is 3 percentage points.

Field work for the index is done by SSRS/Social Science Research
Solutions in Media, Pennsylvania.

Contact for Bloomberg:

Meghan Womack, +1 212-617-8514,