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Consumer Comfort in U.S. Falls to Lowest Level Since November

Consumer confidence declined last week to the lowest level since November as Americans’ views of their finances and the buying climate weakened.

The Bloomberg Consumer Comfort Index fell to 33.3 in the period ended May 25 from 34.1 the prior week. A measure of personal finances retreated for the third time in four weeks, and a gauge of whether this is a good time to buy goods and services dropped to the lowest point since mid-February.

Sentiment among full-time workers and those employed part-time slipped to six-month lows, underscoring the need for more employment opportunities and faster income growth. Rising expenses for food and gasoline are leaving households with less money for non-essential purchases.

“We need to see improved wage growth that spills over into the broader middle class to provide relief,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Households are likely to remain cautious about their spending. They’re skeptical about the strength of the economy.”

Government reports today showed the U.S. economy shrank for the first time in three years during January through March, and initial claims for unemployment benefits declined last week.

Gross domestic product fell at a 1 percent annualized rate in the first quarter, a bigger decline than projected, after a previously reported 0.1 percent gain, the Commerce Department said in Washington. Jobless claims fell by 27,000 to 300,000 in the week ended May 24, according to a Labor Department report.

Stocks Rise

Stocks were higher, with the Standard & Poor’s 500 Index gaining 0.2 percent to 1,914.02 as of 9:31 a.m. in New York. Ten-year Treasury yields fell two basis points to 2.42 percent.

Two of the three components of the Bloomberg comfort index worsened, today’s figures showed. An index of the buying climate dropped to 29 from 30.9, and a measure of consumers’ views on their personal finances fell to 49.5 from 50.8 the prior week.

A gauge of Americans’ views on the current state of the economy rose for the first time in five weeks, to 21.4 from 20.6.

Vehicle sales remain a bright spot for spending. Cars and light trucks sold at a 16 million annualized rate in April after a 16.3 million rate in March, the best back-to-back months for the industry since 2007, data from Ward’s Automotive Group showed.

Among other details of the comfort survey, the measure for consumers earning less than $50,000 a year decreased to 22.5 last week, the lowest in almost seven months. At the other end of the spectrum, Americans with an annual income exceeding $100,000 were more optimistic last week, probably reflecting record stock prices.

Full-Time Workers

The index of full-time workers’ comfort decreased to 36.5 last week from 37.8, while part-timers saw a decline to 28.9 from 30.2. Both measures were at the lowest level since November. The gauge fell to 31.1 for unemployed Americans.

Federal Reserve policy makers project a “further gradual improvement” in the labor market, according to minutes of their April meeting.

Payrolls expanded by more 200,000 workers in May after a 288,000 gain in the prior month that was the biggest since 2012, the median forecast of economists surveyed by Bloomberg showed ahead of a Labor Department report due on June 6.

Higher fuel costs are taking a bigger part of Americans’ paychecks. The price of a gallon of regular gasoline has averaged $3.66 so far in May, up from this year’s low point of $3.27 in early February, according to AAA, the biggest U.6. motoring group.

Dollar Tree

Dollar Tree Inc., a Chesapeake, Virginia-based discount retailer, is among companies watching shoppers to gauge the effects of cuts to food stamps and a still-elevated jobless rate.

“The low middle and the lowest have especially been pressured,” Bob Sasser, chief executive officer, said on a May 22 earnings call. “The unemployment issue still remains high. There is always concern about how long the benefits are going to last,” he said, adding “it’s a worried and concerned consumer.”

Since May, 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 have been revised and analysis of trends, values and other variables also aren’t affected.

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