Consumer Comfort in U.S. Declines for a Fourth Straight Week

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Photographer: Scott Eells/Bloomberg

A shopper walks past a store window display in New York.

Consumer confidence fell for a fourth consecutive week to its lowest level since early April as Americans’ views on the economy and buying climate deteriorated.

The Bloomberg Consumer Comfort Index eased to minus 32.3 for the period ended Sept. 1, its weakest reading since April 7, from minus 31.7. The gauge has dropped 8.8 points after reaching a more than five-year high in the week ended Aug. 4. The series of declines is the longest since January.

The threat of U.S. military action in Syria against a backdrop of rising mortgage rates and higher prices at the gas pump is weighing on consumer attitudes. Faster employment and wage growth would help stabilize sentiment and encourage households to step up the pace of spending, which accounts for about 70 percent of the economy.

“You’re seeing the culmination of a lot of things that have been building,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. Consumers are weighing “geopolitical tail risks emanating from the Middle East, the lagged impact of tax hikes and gasoline prices and slower overall growth and job gains.”

Data from the Labor Department today showed fewer Americans than forecast filed applications for jobless benefits last week. Jobless claims in the week ended Aug. 31 declined by 9,000 to 323,000.

Another report, from the ADP Research Institute in Roseland, New Jersey, showed companies added 176,000 workers to their payrolls in August, in line with the average over the last two years, after a 198,000 increase a month earlier.

Stocks rose after the employment data. The Standard & Poor’s 500 Index advanced 0.2 percent to 1,656.07 at 9:35 a.m. in New York.

Economy View

Two of the Bloomberg index’s three components fell last week. Americans perceptions of the state of the economy dropped to minus 55.3 from minus 55.1 in the prior week, matching the July 14 reading that was its lowest since May.

The buying climate gauge decreased to minus 40.6, its weakest since June 16, from minus 38.7. The share of consumers indicating this is a poor time to make purchases matched last week as the highest since March, indicating a bleaker outlook for consumer spending.

At the same time, consumers’ views of their personal finances were little changed. The Bloomberg index was minus 1.1 after minus 1.3 the prior week, which was the first negative reading since April.

The Bloomberg comfort index (COMFCOMF) compares with mixed readings from other confidence measures. The Thomson Reuters/University of Michigan final index of consumer sentiment in August fell to a four-month low of 82.1 from 85.1 in July that was the highest in six years, data showed last week.

Gas Attack

The Conference Board’s confidence measure unexpectedly advanced to 81.5 from a revised 81 the prior month that was stronger than initially estimated, the New York-based private research group said Aug. 27. The results were collected through Aug. 15, before an Aug. 21 attack in a Damascus suburb where the U.S. government has determined Syrian President Bashar al-Assad’s regime used chemical weapons against civilians.

The charges of a sarin gas attack prompted President Barack Obama to ask Congress to approve military action against Syria at the same time he seeks international support.

“The international community’s credibility is on the line” because of the broad consensus that chemical weapons use must be prohibited, Obama said yesterday at a news conference with Swedish Prime Minister Fredrik Reinfeldt in Stockholm.

The Senate Foreign Relations Committee voted 10-7 yesterday to approve a resolution authorizing U.S. military force in Syria, without ground troops, that would be limited to a maximum of 90 days in duration.

U.S. Involvement

Lawmakers will debate action in Syria amid weak public support for U.S. involvement. Almost six in 10 Americans oppose unilateral missile strikes against Syria, according to an ABC/Washington Post poll. The opposition drops to 51 percent if other nations such as the U.K. and France participate. Seventy percent oppose supplying weapons to the Syrian rebels.

In a survey by the Pew Research Center in Washington, 48 percent opposed air strikes on Syria with 29 percent favoring. In both polls, the opposition crossed party lines. In Pew’s tally, 40 percent of Republicans, 48 percent of Democrats and half of independents oppose the strikes.

Weaker support for military intervention among Democrats may explain why today’s Bloomberg sentiment survey showed those in the party registering a less optimistic outlook on the economy than Republicans for the first time since March 2012, Brusuelas said. Confidence among Republicans improved to its highest level since November 2008.

Republicans’ Sentiment

It marked the first time in 76 weeks that Republicans were less pessimistic than Democrats.

“That’s unusual historically,” Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg, said of the trend’s reversal. “Given factors including Republicans’ generally higher incomes, the CCI was higher among Republicans than Democrats almost continuously from mid-1990 through March 2012.”

Turmoil in the Middle East may further push up prices at the pump and crimp household budgets. The cost of a gallon of regular gasoline averaged $3.59 on Sept. 4, up from an August low of $3.53, according to figures from AAA, the largest U.S. motoring group.

Consumers are also facing higher home financing costs. The rate on a 30-year fixed loan rose to a two-year high of 4.58 percent in the week ended Aug. 22, according to data from Freddie Mac.

Auto Sales

At the same time, car sales have strengthened as some automakers entice buyers with interest-free loans. Cars and light trucks sold last month at a 16 million annualized rate, the fastest since October 2007, according to Ward’s Automotive Group data.

General Motors Co. (GM) recorded its best month since 2008 and Ford Motor Co. (F) its strongest month of retail sales since 2006. Chrysler Group LLC sales rose for the 41st straight month.

Today’s report also showed confidence among women dropped to an almost one-year low. The 21.6-point sentiment gap between men and women was the widest since December 2010.

Part-time workers matched last week’s reading as the least confident since November. A report from the Labor Department tomorrow may show employers added 180,000 to August payrolls and the unemployment rate held at 7.4 percent, according to the Bloomberg survey medians.

Income Groups

Sentiment among those making less than $15,000 worsened by 7.2 points to minus 64.4, a five-week low. Comfort also fell among those making less than $50,000, while those in the highest-earning categories were more positive.

Confidence declined in three of four regions, with the biggest drop in the Midwest, where sentiment is the lowest since early February. At the same time, optimism was strongest in the South, which registered its best reading since July 28.

The Bloomberg Consumer Comfort Index conducts telephone surveys with a random sample of 1,000 consumers ages 18 and older. Each week, 250 respondents are asked for their views on the U.S. economy, personal finances and buying climate. The margin of error for the headline figure is 3 percentage points. 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.

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

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

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