Consumer Comfort in U.S. Improves for First Time in Seven Weeks

Consumer confidence in the U.S. increased for the first time in seven weeks, undoing some of the damage caused by fiscal infighting among federal lawmakers.

The Bloomberg Consumer Comfort Index rose to a five-week high of minus 33.9 in the period ended Nov. 10 from minus 37.9. Uneasiness resulting from the partial government shutdown, which ended in the middle of October, had knocked the confidence measure down to its lowest level in more than a year.

Buoyant stocks, cheaper fuel and hiring gains that beat expectations are providing relief to households heading into holiday-shopping season. At the same time, the ongoing budget debate in Washington and the troubled launch of online health-insurance exchanges are threatening to reverse last week’s pickup in confidence.

“The possibility of a policy shock due to the problems associated with the launch of Obamacare outweigh the one-week rally in sentiment,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Right now, the holiday-shopping outlook does not look particularly promising.”

Another report today showed more Americans than projected filed jobless claims last week. Applications for unemployment benefits decreased by 2,000 to 339,000 in the week ended Nov. 9, the Labor Department said in Washington. The median forecast in a Bloomberg survey called for a decrease to 330,000 claims.

Stocks were little changed after benchmark indexes rose to records yesterday. The Standard & Poor’s 500 Index increased less than 0.1 percent to 1,782.75 at 9:34 a.m. in New York.

Long-Term Average

The Bloomberg comfort index is 17.6 points below its long-term average in weekly surveys since late 1985. Still, the index’s rebound last week was the largest since April.

All three components of the Bloomberg comfort measure showed an improvement last week.

The gauge of personal finances climbed to zero from minus 4.9, the biggest gain in more than a year, as rising equities propped up household balance sheets. The index of Americans’ current views on the economy advanced to minus 62.5 from minus 66.7.

More Americans said that now is a good time to make purchases, according to today’s figures. The Bloomberg buying-climate measure increased to minus 39.2 from minus 42 a week earlier.

Gasoline Prices

Falling prices at the pump have cushioned budgets, making it easier for low-income households in particular to spend on other items.

The average cost of a gallon of regular-grade gas dropped to $3.18 on Nov. 11, the lowest since February 2011, according to data from AAA, the nation’s largest motoring group. Since the end of August, fuel prices have fallen about 40 cents a gallon.

Last week’s payroll report by the Labor Department showed employers added 204,000 workers in October, compared with a median estimate of 120,000 in a Bloomberg survey of economists. The unexpected progress in hiring may influence Federal Reserve policy makers as they decide when to begin tapering stimulus.

Further recovery in the job market, coupled with income and wage growth, would help accelerate spending in the weeks leading up to the holidays, a crucial time for retailers such as the Cincinnati-based Macy’s Inc.

Macy’s Inc.

The second-largest U.S. department-store company yesterday reported fiscal third-quarter profit that beat analysts’ estimates as better local selections boosted sales, signaling stronger demand headed into the holidays. Revenue was particularly strong in October, and the company is “entering the fourth quarter with confidence,” Chief Executive Officer Terry Lundgren said in a statement. That marks a rebound from the second quarter, when sales unexpectedly fell.

Political disagreement in Washington, related to budget negotiations and the rollout of Obamacare, risks souring moods. A congressional panel has yet to reach a funding agreement, before its self-imposed Dec. 13 deadline, that would prevent another shutdown from happening early next year.

Data yesterday showed about 106,000 people signed up for private health insurance through Obamacare last month, and 396,261 for Medicaid plans, putting the government well behind its enrollment goals. In addition, hundreds of thousands of individual policies have faced cancellation since the Affordable Care Act took effect, leading Obama to offer a public apology and potentially curbing Americans’ optimism.

Income Groups

Today’s comfort data figures showed men, young people, Southerners and Democrats reported the largest increases in confidence last week. The gauge among those making less than $50,000 a year jumped 6.8 points compared with the previous week, while the highest-earning group was little changed.

The reading for Democrats strengthened to minus 20.8, the highest since August, from minus 28.9. At the same time, sentiment among Republicans fell for a third straight week to reach minus 34.9, the weakest since May.

The Bloomberg Consumer Comfort Index, compiled by Langer Research Associates in New York, 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.

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Index news: COMFCOMF <Index> CN

To contact the reporter on this story: Ben Schenkel in Washington at bschenkel@bloomberg.net

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

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