Consumer confidence retreated for a second week after reaching an almost eight-year high as lower- and middle-income Americans’ views of their financial well-being dimmed.
The Bloomberg Consumer Comfort Index fell to a five-week low of 45.4 in the period ended April 19 from 46.6. Sentiment of those earning less than $50,000 a year was the weakest in almost two months, while those at the highest end of the income scale were the most upbeat since August 2007.
“Heightened economic disparity may be related to countervailing trends,” Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg, said in a statement. A well-performing stock market is boosting spirits of higher income households, while “lagging wage growth combined with disproportionate low-wage job creation” limits sentiment among lower-income individuals, Langer said.
The employment picture softened somewhat in March with payrolls advancing the least since 2013 as businesses in energy-producing states cut back. Average hourly earnings rose 2.1 percent from the same month last year, in line with the pace since the end of the recession in 2009.
Even with last week’s decline, the sentiment gauge remains well above last year’s average of 36.7, which was the best since 2007.
The measure of personal finances fell to a six-week low of 56 from 58.4. A gauge of the buying climate, showing whether this is a good time to purchase goods and services, decreased to 42.5 from 43.7 the prior week, while the index of views on the state of the economy were little changed.
Workers earning between $15,000 and $25,000 a year saw the biggest decline in comfort last week, dropping 5.6 points to 25.7, the lowest level since December. The measure for individuals earning $100,000 or more rose for the sixth straight week.
Benchmark stock indexes hovering near records are boosting the financial picture for households with investment portfolios, which are typically those at the upper end of the income scale.
Home prices also advanced more than forecast in February, increasing homeowners’ net worth. Prices climbed 0.7 percent on a seasonally adjusted basis from January, the Federal Housing Finance Agency said in a report Wednesday.
The Bloomberg Comfort Index has been presented on a scale of zero to 100 since May 2014, 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.