Consumer Comfort in U.S. Rises for Third Straight Week
April 14th, 2011
The Bloomberg Consumer Comfort Index Was Minus 43 in the Period to April 10
NEW YORK — Consumer confidence in the U.S. rose for a third straight week as improving job prospects made Americans less pessimistic about the economy and their finances.
The Bloomberg Consumer Comfort Index climbed to minus 43 in the period to April 10, the best showing since the end of February, following a minus 44.5 reading the prior week.
Six months of job growth and the income gains that go along with it are helping alleviate some of the strain on household budgets from higher grocery and fuel bills. Americans’ spending, the biggest part of the economy, may have increased in the first quarter at half the pace as the previous three months.
For full CCI results, see: http://www.bloomberg.com/cci
“Sentiment is inching forward,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “The catalyst is the labor market. Consumers are holding on, but at some point they will have to adjust to the higher fuel and food prices.”
The latest results for the comfort survey reflected improvements in all three subcomponents. The index of Americans’ views of the economy rose to minus 80.4 last week from minus 82.5 the prior week.
The measure of personal finances increased to minus 0.5 from minus 0.9, while the index of the buying climate climbed to minus 48 from minus 50. The gauges on personal finances and buying climate are the highest since February.
Figures from the Commerce Department yesterday reinforced the results of the confidence survey that indicated Americans are still spending even as fuel costs jump. The report showed sales at retailers increased 0.4 percent in March, a ninth consecutive gain, following a 1.1 percent advance the prior month that was larger than previously estimated. Demand grew at 10 of 13 major categories.
The Bloomberg Consumer Comfort Index, with data dating back to December 1985, fell to a record low of minus 54 in November 2008, while the peak of 38 was reached in January 2000. Readings averaged minus 45.7 last year.
A Labor Department report today showed jobless claims unexpectedly rose last week, reflecting greater-than-normal volatility at the end of the quarter. Applications increased by 27,000 to 412,000 in the week ended April 9. Economists had forecast claims would be little changed at 380,000, according to the median estimate in a Bloomberg survey.
The increase in claims traditionally seen at the end of a quarter was larger than usual this year, a Labor Department spokesman said as the figures were released.
Other figures showed an increase in wholesale prices. The producer-price index increased 0.7 percent in March, led by higher energy costs, Labor Department figures showed. The so- called core measure, which excludes volatile food and energy prices, rose 0.3 percent, more than projected.
Stocks fell on disappointment over the jump in claims and after Senator Carl Levin called for a federal probe of Goldman Sachs Group Inc. The Standard & Poor’s 500 Index dropped 0.5 percent to 1,307.6 at 9:36 a.m. in New York. Treasury securities were little changed.
“Customers may feel better about their employment situation, but are uneasy due to higher fuel, food, clothing and other costs, as well as geopolitical issues around the globe,” Robert Hull, chief financial officer at Mooresville, North Carolina-based Lowe’s Cos., the second-biggest U.S. home-improvement retailer, said in an April 13 teleconference.
The average price of regular gasoline at the pump rose 11 cents to $3.77 a gallon in the week ended April 10, according to AAA, the nation’s biggest motoring organization. It climbed to $3.81 yesterday, the highest since September 2008.
Rising food and fuel expenses are “eroding purchasing power for households,” signaling the comfort index “is ripe for a sharp reversal” in coming weeks, Brusuelas said.
The “unusual gyrations” in the comfort index “reflect the buffeting winds of the current economy,” Gary Langer, president of Langer Research Associates LLC in New York, which compiles the index for Bloomberg, said in a statement.
The economy created 216,000 jobs in March, the most since May 2010, and the jobless rate fell for a fourth straight month to a two-year low of 8.8 percent, Labor Department data showed April 1.
Reflecting the labor market outlook, the comfort gauges improved last week for Americans with full- and part-time jobs, as well as for those who were unemployed.
Consumers became less pessimistic in most income ranges, led by those making more than $100,000 a year. The comfort index for this group rose to minus 3.6 last week from minus 10.8.
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.
Field work for the index is done by SSRS/Social Science Research Solutions in Media, Pennsylvania.
Contact for Bloomberg:
Meghan Womack, +1 212-617-8514, firstname.lastname@example.org