Consumer confidence last week suffered its biggest one-week drop since the federal government shutdown in October as attitudes toward the buying climate and personal finances soured.
The Bloomberg Consumer Comfort (COMFCOMF) Index declined by 2.2 points, the most since Oct. 13, to 34.9 for the period ended May 11. The gauge has declined since reaching 37.9 during the week ended April 27, the second-highest level since January 2008.
Limited wage gains, costlier food and elevated gasoline prices may help explain the deterioration in sentiment among all age and income groups last week. The figures underscore the importance of faster employment and wage growth in propelling consumer spending and the economy.
“Consumer sentiment is holding up fairly well, though there’s been some deterioration among middle- and lower-income cohorts because of a period of higher gasoline prices,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Comfort will improve as Americans gain confidence in their employment prospects and financial prospects.”
Another report today showed that the fewest Americans in seven years filed applications for unemployment benefits last week, with jobless claims dropping by 24,000 to 297,000 in the week ended May 10, the least since May 2007, according to Labor Department figures.
The Bloomberg gauge of personal finances fell to 50.8 last week from 54 in the prior period, the biggest decrease since August 2012.
The buying climate measure, which asks whether this is a good time to make purchases, dropped to 32.2, the lowest since early April, from 34.5. The 2.3-point decrease was the biggest in more than two years.
The measure of views on the economy fell to the lowest since early February, dropping to 21.5 from 22.9 the prior week.
Higher prices at grocery store checkout lines are leaving households with less ash to spend elsewhere. Food expenses climbed 0.4 percent in April for a third straight month, the Labor Department’s consumer-price index showed today. The cost of meat increased 2.9 percent, the most since November 2003.
Gas prices remain elevated. The cost of a gallon of regular gasoline at the pump was $3.64 on May 13, up from $3.18 in November, based on data from U.S. motoring group AAA. Still, prices have started to retreat, falling about 5 cents from a recent high. Further declines would provide some relief to budgets.
Wage gains have been slow to accelerate. Average hourly earnings climbed 1.9 percent in the 12 months through April, the smallest year-over-year advance since December, according to the Labor Department.
Faster job growth that translates into bigger paychecks would help provide a boost to optimism. Payrolls rose 288,000 last month, the biggest increase in two years, while the jobless rate matched the lowest since September 2008, a May 2 Labor Department report showed.
Today’s comfort survey found confidence declined across all income brackets. Sentiment decreased the most among those earning $15,000 to $25,000, dropping 5.2 points to 18.6, the weakest in a year.
Among age groups, those between 18 and 34 years old showed the biggest drop in sentiment, while senior citizens’ confidence fell the least.
Sentiment also deteriorated in three of four U.S. regions. It dropped the most in the Northeast -- 6.2 points, the biggest decline since August 2007.
This is the third release in which the Bloomberg comfort index has been presented on a scale of zero to 100 rather than the previous minus 100 to 100, with the midpoint shifting to 50 from zero. The change is also reflected in the gauge’s components. It doesn’t affect the measures’ relationship to each other or their correlation with other economic indicators. Historical data has been revised and analysis of trends, values and other variables also aren’t affected.
To contact the reporter on this story: Jeanna Smialek in Washington at email@example.com