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Consumer Expectations in U.S. Fall to Lowest Level in Two Years

June 16, 2011

Press Release
The Bloomberg Consumer Comfort Index Was Minus 44 in the Period
to June 12
New York — Americans’ views on the economy’s outlook soured in
June, showing that unemployment, inflation and the slump in
housing are concerning consumers.

The Bloomberg gauge of economic expectations dropped to minus 31
this month, the lowest level since March 2009, from minus 16 in
May. The Consumer Comfort Index, issued weekly, improved to
minus 44 in the period to June 12, the highest level since mid
April, from minus 45.9 as fuel prices kept falling.

For full CCI results, see:

“Persistently high unemployment and the long-suffering housing
market continue to cast dark clouds, likely informing the
public’s increasingly unhappy outlook for the future,” Gary
, president of Langer Research Associates LLC in New York,
which compiles the index for Bloomberg, said in a statement.

“In terms of conditions now, the lead foot of gas prices has
lightened lately.”

Joblessness climbed to 9.1 percent in May, the highest level
this year, and employers added fewer workers to payrolls than
forecast. At the same time, consumer prices last month exceeded
projections as the cost of everything from autos to hotel fares
climbed, making it more difficult for American households to
make ends meet.

Other reports today showed housing starts climbed in May and
claims for unemployment benefits decreased last week.

Work began on 560,000 houses at an annual pace, up 3.5 percent
from the prior month and exceeding the 545,000 median forecast
of economists surveyed by Bloomberg News, figures from the
Commerce Department showed. The gain was led by an 18 percent
jump in the West that took construction in that area to the
highest level since August.

Jobless claims declined by 16,000 to 414,000 in the week ended
June 11, indicating the pickup in firings that began in
April is abating, figures from the Labor Department also showed.
Economists surveyed by Bloomberg projected 420,000 filings,
according to the median forecast.

The reports on housing and claims tempered concern about a
slowdown in growth, sending stocks higher. The Standard & Poor’s
500 Index climbed 0.2 percent to 1,268.4 at 9:40 a.m. in New
York. Treasury securities also rose, sending the yield on the
benchmark 10-year note down to 2.95 percent from 2.97 percent
late yesterday.

The 15-point decrease is the consumer expectations index’s
biggest one-month drop since December 2008. The outlook over the
past month deteriorated most among households making from
$15,000 to $40,000 a year and among older Americans.

“Working-class households indicated a growing dissatisfaction
with the direction of the economy likely due to rising inflation
and an elevated rate of unemployment,” said Joseph Brusuelas, a
senior economist at Bloomberg LP in New York. “This group is
likely experiencing the most difficulty in adjusting to the
higher costs of necessities and the inability to draw on credit
due to the relatively tight credit conditions that persist.”

The gain in the weekly comfort index was paced by two of three
components. The gauge of personal finances rose to minus 6.4
last week from minus 8.5. The buying climate index increased to
minus 48.6 from minus 53.8.

Falling fuel costs have helped lift consumers’ moods. The
average price of a gallon of regular gasoline dropped to $3.69
yesterday from $3.99 on May 4 that was the highest since July
2008, according to AAA, the nation’s largest auto group.

At the same time, the comfort report’s measure of Americans’
views of the economy was minus 77 last week, down from minus
75.5 the previous week.

Recent data showing slower job growth and a housing market that
is struggling to recover may be dimming consumers’ views on the
economy. Payrolls grew by 54,000 workers in May after rising by
232,000 the prior month, Labor Department figures showed June 3.

Home prices in 20 cities dropped in March to the lowest level
since 2003. The S&P/Case-Shiller index of property values fell
3.6 percent from March 2010, the biggest year-over-year decline
since November 2009, the group said in a May 31 report.

“While any improvement in consumer sentiment is a positive given
the dreary economic numbers that the public has observed over
the past two months, beneath the headline the data suggest there
is real trouble lurking,” Bloomberg’s Brusuelas said.

The overall comfort index reading is still consistent with
levels seen during a recession, according to Langer. The gauge
averaged minus 45.7 last year.

“The economy isn’t growing strong enough to generate enough jobs
to start really attacking the unemployment rate, consumer
isn’t as strong as you’d like it to be,”
Ford Motor Co. Controller Bob Shanks said during a conference

Bloomberg’s monthly measure of the U.S. economy’s direction
showed the proportion of people saying things are getting worse
jumped the most since September 2009, while fewer people said
the economy is getting better. Forty-seven percent of those
surveyed had a more negative outlook, compared with 36 percent
in mid May. Sixteen percent said the economy is getting better,
down from 20 percent in the last survey.

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:

Kristin Swenson, +1 212-617-4264,