Consumer Confidence in U.S. Rises for Fourth Consecutive Week

Consumer confidence in the U.S. climbed for the fourth straight week as more Americans said their personal finances were improving.

The Bloomberg Consumer Comfort Index rose to minus 36.4 in the week ended June 10, the highest level since late April, from minus 37.6 the prior period. Each of its three components -- the economy, finances and buying plans -- advanced.

“It is likely a function of the steady drop in gasoline prices,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Households feel a bit more comfortable about their own financial situation.”

Record-low mortgage rates are spurring a surge in refinancing, which combined with the lowest fuel prices in four months and stabilization in stocks, may be easing constraints on Americans’ financial resources. At the same time, it may be difficult to achieve additional gains in confidence without a pickup in the job market.

The comfort index last week was little changed from this year’s average of minus 38.7.

More Americans than forecast applied for unemployment insurance payments last week, the latest sign that the labor market is struggling, figures from the Labor Department showed today. Claims for jobless benefits unexpectedly climbed by 6,000 to 386,000 in the week ended June 9 from a revised 380,000 the prior week that was more than first estimated.

Survey Results

Economists projected claims would fall to 375,000, according to the median estimate in a Bloomberg News survey.

Another Labor Department report showed consumer prices fell 0.3 percent in May, more than projected and led by the biggest drop in gasoline in more than three years.

The fuel’s cost has continued to decline this month. A gallon of regular gasoline at the pump cost $3.53 on average yesterday, the least since mid-February, according to AAA, the biggest U.S. auto group.

“Gasoline prices may be helping,” said Gary Langer, president of Langer Research Associates LLC in New York, which compiles the index for Bloomberg. Nonetheless, “the index’s historically low level highlights the deep impact of the recession and its long way to recovery.”

Since its inception in December 1985, the gauge has averaged minus 15.4.

Stocks were little changed today as the reports on inflation and claims bolstered speculation the Federal Reserve will act to spur growth, while investors awaited the results of the election in Greece this weekend. The Standard & Poor’s 500 Index was at 1,315.1 at 9:40 a.m. in New York, up less than 0.1 percent from yesterday’s close.

Shares Climbed

Last week, the S&P 500 Index rose 3.8 percent, the biggest 5-day gain of the year.

After increasing 16 points in the first three months of the year, the overall measure of consumer sentiment gave back 12.2 points in the ensuing six weeks. The past four periods, the index has gained 7.2 points.

Lower financing costs may also be contributing. The average rate on a 30-year fixed mortgage dropped to 3.67 percent for the week ended June 7, the lowest in data going back to 1972, according to Freddie Mac. The Mortgage Bankers Association’s refinancing index climbed last week to the highest level in three years.

The Bloomberg measure of Americans’ views of their personal finances rose to minus 2.0 from minus 3.1, and a measure of whether consumers consider it a good time to buy improved to minus 41.4 from minus 41.6.

The index on the current state of the economy climbed to minus 65.7 from minus 68.1. “Poor” ratings of the economy, the weakest readings, were at their lowest in 16 months.

Job Market

A slackening job market may be one reason Americans economic outlook remains glum. Payrolls climbed by 69,000 in May, less than the most-pessimistic forecast in a Bloomberg survey, after a revised 77,000 gain in April that was smaller than initially estimated, figures showed June 1. The jobless rate rose to 8.2 percent from 8.1 percent.

“The current consumer environment is not for the faint of heart,” requiring longer-term business plans, Denise Morrison, chief executive officer of Campbell Soup Co. (CPB), said at a May 30 conference. “We believe, as consumers seek to rebound emotionally and recover from recession fatigue, they want the foods they eat to help them have fun and enjoy life.”

The comfort index has been higher among Democrats than Republicans for 12 consecutive weeks, beating previous records of six weeks in late 1996 and five weeks in mid-2011. The index improved 0.4 point among Democrats last week and declined 1.7 points among Republicans.

Political Affiliations

Sentiment among independent voters improved to minus 34.8 last week from minus 37.6. The gain in confidence among swing voters pushed Republicans down to the lowest of the three affiliations surveyed for the first time since mid-April.

Last week also marked the 12th consecutive time that Americans with household incomes of at least $100,000 registered positive sentiment readings. The figure for that group was 10.3, marking the first time since December 2010 that the index has been 10 or higher in back-to-back weeks.

Sentiment among residents in the Northeast was minus 22.2 - - an improvement of 3.7 points over the previous period, and landing the figure at its highest since January 2008.

Other optimism measures have been mixed. A Conference Board index showed confidence dropped to a four-month low in May, as Americans were more pessimistic about jobs. The Thomson Reuters/University of Michigan gauge climbed in May to its highest since October 2007. The group’s June preliminary number will be released tomorrow.

Survey Details

The Bloomberg Consumer Comfort Index is based on responses to telephone interviews with a random sample of 1,000 consumers 18 years old and older. 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 index can range from 100, indicating every participant in the survey had positive responses to all three components, to minus 100, signaling all views were negative. The margin of error for the headline reading is 3 percentage points.

To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net

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

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