Americans’ expectations for the economy slumped in May by the most since October 2013, casting doubt on consumers’ ability to revive growth.
A measure tracking the economic outlook fell by 6 points to 44 this month, data from the Bloomberg Consumer Comfort Index showed Thursday. Thirty-nine percent said the U.S. economy is getting worse, the largest share since the federal government shutdown 19 months ago.
“The increase in negative expectations occurred among a disparate collection of groups, indicating a generalized retrenchment,” Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg, said in a statement.
The weekly sentiment index dropped to 42.4 in the period ended May 17, the lowest since mid-December, from 43.5 as fewer consumers said now was a good time to spend. Such angst, particularly among lower-income households, probably has its roots in steadily climbing prices at the gas pump and limited wage gains.
“Despite positive employment and housing reports, consumer concerns may reflect still-stagnant wages as well as sharp divisions between higher- and lower-income groups in economic views,” Langer said. “The latest stumble makes clear that economic travails continue for many Americans.”
The U.S. economy has largely disappointed this year, with weaker-than-expected retail sales data last week capping a recent run of reports showing scant momentum. Consumer spending, which accounts for almost 70 percent of gross domestic product, climbed at a 1.9 percent annualized rate in the first quarter, the slowest in a year and less than half the 4.4 percent advance in the final three months of 2014.
Two of three components in Bloomberg’s weekly comfort index deteriorated last week. Americans’ current views of the economy soured to 32.8, also the lowest since mid-December, from 34.5 in the prior period.
The Bloomberg Economic Surprise Index has been hovering near its lowest level of the expansion, indicating economic data have been persistently disappointing.
Retail purchases barely budged in April, defying estimates for a small increase, Commerce Department data showed last week. The figures followed a 0.2 percent drop in January through March that marked the first quarterly decline in almost three years.
Spending may be slow to pick up. The Bloomberg measure of the buying climate -- showing whether this is a good time to purchase goods and services -- declined to 38.1 from 40.4, the largest decrease in a year. The measure of personal finances increased to a five-week high of 56.3 from 55.7.
Sentiment among respondents who were unemployed decreased to the weakest level since the beginning of the year. Confidence also was the lowest since at least the start of 2015 among college graduates, homeowners, married couples, women and Southerners. Those making less than $50,000 a year were the least upbeat in five months.
While the weekly Bloomberg confidence measure has dropped six straight weeks, the longest such stretch since 2013, it’s still above last year’s average of 36.7 that was the best since 2007.
A brightening employment picture may help underpin Americans’ sentiment. Payrolls rebounded in April, with employers adding 223,000 jobs after an 85,000 gain the prior month that was the smallest since June 2012. The unemployment rate dropped to 5.4 percent, the lowest since May 2008.
The housing market also has shown signs of life after a weather-depressed first quarter. Builders broke ground on 1.14 million homes at an annualized rate last month, the most since November 2007 and up 20.2 percent from March, figures from the Commerce Department showed Tuesday. It was the single-biggest monthly surge since 1991.
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 also is 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.