Consumers’ U.S. Economic Outlook Retreats From Four-Year HighVictoria Stilwell
Americans’ outlooks for the U.S. economy dimmed in March from a four-year high as feeble wage gains and harsh winter weather weighed on sentiment.
The Bloomberg Consumer Comfort Index’s monthly economic expectations gauge fell to a three-month low of 51.5 from a February reading of 54 that was the strongest since January 2011. In contrast, the weekly sentiment measure improved to a one-month high of 44.2 in the period ended March 15 from 43.3.
“Despite solid employment numbers, wages are stagnant, and recent reports show retail sales, manufacturing and housing starts all struggled in February,” Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg, said in a statement.
Limited pay gains, higher heating bills and gasoline prices above their January lows combined to leave households less upbeat this month. At the same time, the setback in March sentiment may prove short-lived as employers keep taking on more workers and inflation remains low.
The weekly personal finances gauge climbed to 57.1, the highest since early February, from 54.8 in the previous week. The weekly measure of Americans’ views on the current state of the economy was little changed at 37.2 after 37.1. A gauge of the buying climate, which indicates whether consumers think now is a good time to purchase goods and services, was 38.3 last week after 38.2.
Some 30 percent of respondents this month said the economy is getting better, the smallest share since November. Forty-three percent said it’s staying the same, up from 38 percent a month earlier.
Even with the March decline, the monthly economic expectations gauge has averaged 52.8 this year, the strongest for a comparable period since March-May 2002.
Solid job growth has helped sustain confidence, with payrolls climbing by 295,000 in February following a gain of 239,000 the previous month. At 5.5 percent, the unemployment rate is the lowest in almost seven years, according to the Labor Department.
Those gains may be giving hope to job seekers. Confidence among the unemployed climbed to the highest level since August 2007. Those 35 to 44 years old, who are in their prime earning years, were more confident than at any time since October 2007.
Even with the progress in the labor market, faster wage growth has failed to materialize. Average hourly earnings climbed 2 percent in February from the year before, matching the mean pace of the expansion.
The weekly measure of sentiment rose in five of seven income brackets. Confidence for those making $40,000 to $50,000 was the highest since December 2007, while optimism among $75,000-to-$100,000 earners was the weakest in three months.
In the Northeast, where higher heating bills are coming due after temperatures plunged a month earlier, sentiment fell to the lowest level since early November. Confidence rose in the Midwest, West and South, where it climbed to the highest level since September 2007.
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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