Consumer Comfort in U.S. Little Changed From Recession Levels

Consumer confidence in the U.S. was little changed last week from levels typically reached during past recessions.

The Bloomberg Consumer Comfort Index was minus 50.2 in the period ended Nov. 27, after minus 50.1 the prior week. The gauge has been at minus 50 or worse for 10 of the past 11 weeks.

The lack of improvement underscores concern over unemployment hovering around 9 percent, wrangling by lawmakers over reducing the budget deficit, and the European debt crisis. Americans’ dim views prompted retailers to resort to price-cuts and earlier hours to boost sales in the week of the Thanksgiving holiday, the unofficial start of the shopping season.

“Consumer spirits remain depressed amid elevated unemployment and tumultuous global economic conditions,” said Richard Yamarone, a senior economist at Bloomberg LP in New York. “In this environment, the only spending that seems to take place is during deep discounts, heavy couponing, or widespread sales.”

Two of the three components of the weekly comfort index deteriorated. The measure of Americans’ views of the current state of the economy worsened to minus 88.5 last week from minus 87.2 in the prior period. The buying climate index fell to minus 49.4 from minus 48.8. The gauge of personal finances improved to minus 12.7, from minus 14.3.

More Americans than forecast filed applications for unemployment benefits during the holiday-shortened week, signaling limited recovery in the labor market, another report today showed.

Jobless Claims

Jobless claims climbed by 6,000 to 402,000 in the week ended Nov. 26 that included the Thanksgiving holiday, the Labor Department reported in Washington. The median forecast in a Bloomberg News survey called for a drop to 390,000.

Stocks fell after the claims figures and weaker manufacturing in China raised concern about global growth. The Standard & Poor’s 500 Index dropped 0.3 percent to 1,242.82 at 9:37 a.m. in New York.

The confidence report showed diverging views among groups and regions. Homeowner sentiment dropped to minus 50.1, the third-lowest ever, while that of households earnings $50,000 or more climbed to the highest level since July.

Regionally, the comfort index for the Midwest fell to a record low, while the gauge for the West jumped to a four-month high.

This Year

The Bloomberg comfort index, which began December 1985, has averaged minus 46.7 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.

One silver lining may be that fewer Americans, 29 percent compared with 35 percent in the previous week, said it was a “poor” time to purchase goods. Retailers including Macy’s Inc. (M), Wal-Mart Stores Inc. (WMT) and Toys “R” Us Inc. were offering steep discounts and earlier opening hours for Black Friday, the day after Thanksgiving.

“At least some holiday shoppers are finding products and prices they like at the start of the crucial Christmas retail season,” Gary Langer, president of Langer Research Associates LLC in New York, which compiles the index for Bloomberg, said in a statement. “The question likely is not whether consumers will suddenly turn gleeful in the next month, but rather whether retailers can coax them out of their shell.”

Shoppers still had to finish more than 60 percent of their holiday buying as of Nov. 26, the same amount as a year earlier, while their spending in the past weekend jumped 9.1 percent to $398.62, on average, according to the Washington-based National Retail Federation.

Conference Board

Some surveys signal consumers are turning less pessimistic on the outlook for jobs and wages. The Conference Board’s index increased to 56 in November from 40.9 a month earlier, the biggest monthly gain since April 2003, figures from the New York-based private research group showed Nov. 29.

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.

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

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net