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U.S. Consumer Confidence Stagnates, Economy View Sours

July 21, 2011

Press Release

The Bloomberg Consumer Comfort Index Was Minus 43.3 in the
Period to July 17

New York — Consumer confidence stagnated last week as
Americans’ optimism over their current finances clashed with
growing pessimism about the state of the economy.

The Bloomberg Consumer Comfort Index was minus 43.3 in the
period to July 17, the highest since April, compared with minus
43.9 the prior week. The monthly gauge of the economic outlook
improved from a two-year low.

For full CCI results, see:

Unemployment at 9.2 percent in June, the smallest payroll gain
in nine months, and a foreclosure-ridden housing market are
weighing on the outlook for growth. Gasoline prices are rising
again after declining in May and June, threatening to further
limit consumer purchases, the biggest part of the economy.

“Household confidence remains historically depressed,” said
Joseph Brusuelas, a senior economist at Bloomberg LP in New
York. “The consumer is likely not to be a major factor in
driving growth during the current business cycle compared to
past cycles.”

Even with the gain, which is within the survey’s 3-point margin
of error, the gauge is at a level consistent with recessions,
the report said.

More Americans than forecast filed claims for unemployment
last week, reflecting the volatility of applications
during the annual auto-plant retooling period, a report from the
Labor Department showed today. Applications for jobless
insurance payments increased 10,000 in the week ended July 16 to
418,000. Economists forecast 410,000 claims, according to the
median estimate in a Bloomberg News survey.

Stocks rose on better-than-estimated results from AT&T Inc. and
Morgan Stanley. The Standard & Poor’s 500 Index climbed 0.4
percent to 1,330.92 at 9:37 a.m. in New York. Treasury
fell, sending the yield on the benchmark 10-year up
to 2.96 percent from 2.93 percent late yesterday.

Last week’s comfort data showed declines in two of the three
subcomponents. The index of Americans’ views of the economy
dropped to minus 83.7 last week, the worst reading since March,
from minus 83.3 the prior period. A gauge of the buying climate
fell to a six-week low of minus 50.7 from minus 46.7.

One bright spot was the index of personal finances, which rose
to 4.4, matching a high last seen in May 2009, from minus 1.6
the prior week. Survey readings prior to this year reflect
results rounded off to whole numbers.

The gauge of expectations for the economy’s direction rose this
month to minus 22 from minus 31 in June that was the weakest
reading since March 2009. The improvement reflected an increase
in the number of people that said conditions will remain the
same rather than deteriorate further, the report showed.

“An easing of negative expectations beats the alternative,” Gary
, president of Langer Research Associates LLC in New York,
which compiles the index for Bloomberg, said in a statement.

Consumers in the West and married adults led the advance in the
forward-looking gauge.

The results for personal finances and monthly expectations “are
harbingers of hope for long-suffering consumer sentiment,”
Langer said.

The Bloomberg comfort index, which began December 1985, has
averaged minus 44.7 this year compared with minus 45.7 for all
of 2010 and minus 47.9 in 2009, the year the recession ended,
the report showed.

Other reports showed consumers’ moods remain dim. The Thomson
Reuters/University of Michigan preliminary index of consumer
sentiment fell in July to 63.8, the weakest reading since March
2009, when the economy was still in a slump.

Household budgets are again getting squeezed by fuel bills. The
average price of regular gasoline at the pump rose to $3.68 a
gallon on July 19, up 13 cents from the end of June, according
to AAA, the nation’s biggest motoring organization. It had been
declining the past two months after reaching an almost three-
year high of $3.99 on May 4.

“The challenging economy” is hurting sales, according to
executives at Fred’s Inc. (FRED), a general-merchandise discount
retailer. The Memphis, Tennessee-based company said second-
quarter earnings will be at the low end of its estimate after
sales at stores open at least a year fell 0.7 percent in June
from a year earlier.

The results “demonstrated the broader decline in consumer
sentiment that has been reported,” Bruce Efird, chief executive
officer of Fred’s, said in a July 7 statement. “After a solid
start in the first half of June, we saw a significant downward
adjustment in the last half.”

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 most recent reading is
based on the average of responses over the previous four weeks.

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.

Contact for Bloomberg:

Meghan Womack, +1 212-617-8514,