Consumer Comfort in U.S. Declined Last Week to Four-Month Low

Consumer confidence fell last week to a four-month low as Americans grew more pessimistic about the economy and their finances.

The Bloomberg Consumer Comfort Index declined to 34.8 in the period ended Sept. 28, the lowest reading since May 25, from 35.5. Views of the economy were also the weakest in four months, and the personal finances gauge dropped to its lowest reading since early August.

The recent setback in sentiment has been concentrated among lower-income households, underscoring the need for faster wage gains as the labor market recovers. Last week’s drop in confidence capped the strongest quarter since the recession, indicating consumers see halting progress in the economy.

“The challenges of the CCI align with mixed economic signals,” Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg, said in a statement. While consumer spending has been sustained, “the employment picture remains cloudy.”

Another report today showed the number of Americans filing for unemployment benefits unexpectedly fell last week. Initial jobless claims dropped by 8,000 to 287,000 in the period ended Sept. 27, the Labor Department said. The median estimate of economists in a Bloomberg survey called for 297,000 claims.

Stocks fluctuated as investors assessed details of the European Central Bank’s stimulus program. The Standard & Poor’s 500 Index climbed less than 0.1 percent to 1,947.12 at 9:35 a.m. in New York.

The Bloomberg gauge of Americans’ views on the current state of the economy declined to 22.4 last week, the weakest since the period ended May 25, from 22.9.

Personal Finances

The measures of personal finances dropped to 50.2, the lowest since Aug. 3, from 51.3. A gauge of the buying climate, which shows whether this is a good time to purchase goods and services, fell to 31.9 from 32.2.

Even with the recent declines, the overall index averaged 36.7 in the third quarter, the best since the end of 2007.

Sentiment among those earning less than $50,000 a year dropped last week to the lowest level since the period ended May 25. Among those earning more than $100,000 a year, confidence improved as the gap between the two income groups reached its widest point since early November.

Today’s report also showed employment opportunities may be waning. Sentiment among the jobless dropped last week to 28.7, the lowest since Aug. 3.

Sentiment among those Americans paying rent dropped to the lowest level since early November 2013, resulting in the largest confidence gap between renters and homeowners in five years. The difference may reflect higher rents and helps explain why homebuilders are more upbeat about the industry.

Home Ownership

“Low interest rates continue to drive favorable affordability levels and with rising rents, home ownership is a compelling option,” Jeffrey T. Mezger, chief executive officer at KB Home, a Los Angeles-based builder of single-family homes, said on Sept. 24 teleconference call.

The Bloomberg Comfort Index has been presented on a scale of zero to 100 since May, 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.

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