The Bloomberg Consumer Comfort Index Was Minus 43.3 in the Period to July 17
New York — Consumer confidence stagnated last week as Americans’ optimism over their current finances clashed with growing pessimism about the state of the economy.
The Bloomberg Consumer Comfort Index was minus 43.3 in the period to July 17, the highest since April, compared with minus 43.9 the prior week. The monthly gauge of the economic outlook improved from a two-year low.
For full CCI results, see: http://www.bloomberg.com/cci
Unemployment at 9.2 percent in June, the smallest payroll gain in nine months, and a foreclosure-ridden housing market are weighing on the outlook for growth. Gasoline prices are rising again after declining in May and June, threatening to further limit consumer purchases, the biggest part of the economy.
“Household confidence remains historically depressed,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “The consumer is likely not to be a major factor in driving growth during the current business cycle compared to past cycles.”
Even with the gain, which is within the survey’s 3-point margin of error, the gauge is at a level consistent with recessions, the report said.
More Americans than forecast filed claims for unemployment benefits last week, reflecting the volatility of applications during the annual auto-plant retooling period, a report from the Labor Department showed today. Applications for jobless insurance payments increased 10,000 in the week ended July 16 to 418,000. Economists forecast 410,000 claims, according to the median estimate in a Bloomberg News survey.
Stocks rose on better-than-estimated results from AT&T Inc. and Morgan Stanley. The Standard & Poor’s 500 Index climbed 0.4 percent to 1,330.92 at 9:37 a.m. in New York. Treasury securities fell, sending the yield on the benchmark 10-year up to 2.96 percent from 2.93 percent late yesterday.
Last week’s comfort data showed declines in two of the three subcomponents. The index of Americans’ views of the economy dropped to minus 83.7 last week, the worst reading since March, from minus 83.3 the prior period. A gauge of the buying climate fell to a six-week low of minus 50.7 from minus 46.7.
One bright spot was the index of personal finances, which rose to 4.4, matching a high last seen in May 2009, from minus 1.6 the prior week. Survey readings prior to this year reflect results rounded off to whole numbers.
The gauge of expectations for the economy’s direction rose this month to minus 22 from minus 31 in June that was the weakest reading since March 2009. The improvement reflected an increase in the number of people that said conditions will remain the same rather than deteriorate further, the report showed.
“An easing of negative expectations beats the alternative,” Gary Langer, president of Langer Research Associates LLC in New York, which compiles the index for Bloomberg, said in a statement.
Consumers in the West and married adults led the advance in the forward-looking gauge.
The results for personal finances and monthly expectations “are harbingers of hope for long-suffering consumer sentiment,” Langer said.
The Bloomberg comfort index, which began December 1985, has averaged minus 44.7 this year compared with minus 45.7 for all of 2010 and minus 47.9 in 2009, the year the recession ended, the report showed.
Other reports showed consumers’ moods remain dim. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell in July to 63.8, the weakest reading since March 2009, when the economy was still in a slump.
Household budgets are again getting squeezed by fuel bills. The average price of regular gasoline at the pump rose to $3.68 a gallon on July 19, up 13 cents from the end of June, according to AAA, the nation’s biggest motoring organization. It had been declining the past two months after reaching an almost three- year high of $3.99 on May 4.
“The challenging economy” is hurting sales, according to executives at Fred’s Inc. (FRED), a general-merchandise discount retailer. The Memphis, Tennessee-based company said second- quarter earnings will be at the low end of its estimate after sales at stores open at least a year fell 0.7 percent in June from a year earlier.
The results “demonstrated the broader decline in consumer sentiment that has been reported,” Bruce Efird, chief executive officer of Fred’s, said in a July 7 statement. “After a solid start in the first half of June, we saw a significant downward adjustment in the last half.”
The Bloomberg Consumer Comfort Index is based on responses to telephone interviews with a random sample of 1,000 consumers aged 18 and over. Each week, 250 respondents are asked for their views on the economy, personal finances and buying climate; 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. The margin of error for the headline reading is 3 percentage points.
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