Tags: consumer comfort | bloomberg | economy | finances

Bloomberg: Consumer Comfort Hits 4-Month Low on Economic, Financial Fears

Thursday, 25 September 2014 02:25 PM

Consumer confidence fell last week to an almost four-month low as Americans’ views of the economy and their finances deteriorated.

The Bloomberg Consumer Comfort Index declined to 35.5 in the period ended Sept. 21, the worst reading since the first week of June, from 37.2. The personal finances gauge dropped by the most since mid-May, while attitudes about the world’s largest economy were the dimmest in four months.

The comfort index is hovering close to this year’s average, indicating job growth that sparks bigger wage gains are needed to set the stage for more spending. While stock-market gains helped boost sentiment among Americans with incomes of more than $50,000 a year, confidence of those earning less fell to a four- month low.

“Consumers are still looking for some tangible sign of economic improvement and have yet to see it,” said Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg. “This week shows the struggle.”

The Bloomberg gauge of Americans’ views on the current state of the economy declined to 22.9 last week, the weakest since May 25, from 24.

The measures of personal finances dropped to 51.3, the lowest since Aug. 10, from 54.3. A gauge of the buying climate, which shows whether this is a good time to purchase goods and services, dropped to 32.2 from 33.4.

Jobless Claims

Among other reports today, fewer Americans than forecast filed for unemployment benefits last week. Initial jobless claims rose by 12,000 to 293,000 in the period ended Sept. 20, the Labor Department said. The median estimate of economists in a Bloomberg survey called for 296,000 claims.

Orders for business equipment climbed more than forecast in August, other data showed. A 0.6 percent advance in bookings for non-military capital goods excluding aircraft followed a 0.2 percent decrease in July that was smaller than previously estimated, according to the Commerce Department. Demand for all durable goods -- items meant to last at least three years -- slumped a record 18.2 percent as commercial aircraft orders dropped after surging a month earlier.

Stocks fell, after the Standard & Poor’s 500 Index climbed by the most in over a month, as investors assessed today’s data for clues on the timing of any Federal Reserve rate increase. The S&P 500 dropped 0.3 percent to 1,992.13 at 9:39 a.m. in New York.

Sentiment among those earning less than $50,000 a year dropped to the lowest level since the period ended June 1, underscoring how bigger wage gains remain a missing element as the labor market improves. Employers have added 215,380 jobs a month on average this year. That compares with 2013’s average of 194,250 and 186,330 the previous year.

Unemployed Sentiment

Today’s report showed employment opportunities may be waning. Sentiment among the unemployed dropped last week by the most since February 2011.

Average hourly earnings rose 2.1 percent in August from a year ago, in line with the average since the recession ended in mid-2009, according to Labor Department figures.

Such wage growth has limited spending. Household purchases decreased 0.1 percent in July, the first decline in six months, after a 0.4 percent gain in June, Commerce Department figures showed last month. Incomes rose at the slowest pace of the year and savings climbed to the highest level since the end of 2012.

Dunkin’ Brands Group, which operates Dunkin’ Donuts and Baskin Robbins ice cream stores, lowered its forecast for earnings as lower-wage Americans cut back.

First Half

“The first half has been challenging,” John Costello, president of the coffee and ice cream franchise’s marketing and innovation, said at a Sept. 17 investor and analyst meeting. “The lower-income households continue to struggle. Consumer confidence kind of motors along. It’s made the value segment very competitive.”

Sentiment among households making above $50,000 a year rose by 2.4 points to 49.7, expanding the gap between the two income groups to its widest since early June.

Among regions, the Northeast showed the biggest drop in sentiment last week, with the index falling by 3.1 points to 31.6. Confidence in the Midwest and South fell to a five-week low.

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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Consumer confidence fell last week to an almost four-month low as Americans' views of the economy and their finances deteriorated..
consumer comfort, bloomberg, economy, finances
Thursday, 25 September 2014 02:25 PM
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