US consumer confidence declined to two-month low in week ended April 6 versus previous week amid rising fuel prices, negative perceptions of personal finances, finds Bloomberg Consumer Comfort Index
Cindy Allen
WASHINGTON
,
April 10, 2014
(Bloomberg LP)
–
Consumer confidence declined last week to a two-month low as rising fuel prices caused Americans’ views to sour.
The Bloomberg Consumer Comfort Index fell to minus 31.9 in the period ended April 6 from minus 30 the prior week. Perceptions of personal finances turned negative for the second time in three weeks, dropping to the lowest level since early November. The highest gasoline prices in seven months and limited wage growth are crimping household budgets even as employment picks up following unusually harsh weather. Further job and income gains would help provide a spark for the consumer spending that makes up the largest part of the economy. “Rising gasoline costs and falling equity prices are likely exerting a gravitational pull on consumer sentiment,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Both lower-end and upper-end income cohorts showed some visible discomfort due to declines in discretionary spending power.” Another report today showed the labor market continues to make strides. The number of Americans filing applications for unemployment benefits dropped by 32,000 in the period ended April 5 to 300,000, the fewest since May 2007, the Labor Department reported. Stocks were little changed as investors awaited earnings reports. The Standard & Poor’s 500 Index fell 0.1 percent to 1,870.09 at 9:40 a.m. in New York. Yesterday it posted its biggest gain in five weeks. The comfort survey showed a measure of views of the economy fell to an eight-week low of minus 53.8 from minus 53.3. The gauge of the buying climate declined to minus 39.1 from minus 37. The personal finances index fell to minus 2.9, its weakest since Nov. 3, followed a 0.5 reading in the prior period. The more pessimistic confidence readings raise the risk that any rebound in spending following colder-than-normal winter temperatures will not be sustained. Cars and light trucks sold in March at a 16.3 million annualized rate, the fastest since May 2007, following a 15.3 million pace the prior month. Purchases at General Motors Co., Ford Motor Co., Toyota Motor Corp., Nissan Motor Co. and Chrysler Group LLC all topped analysts’ estimates. On the other hand, companies such as Colorado Springs, Colorado-based Century Casinos Inc. have seen business slow. “It’s not only the weather, there’s also still significant economic uncertainty out there that is contributing to the reduced customer spending,” Peter Hoetzinger, co-chief executive officer of Century Casinos, said on a March 31 earnings call. The company performed “behind expectations” in the second half of 2013, he said. Rising gasoline prices are one restraint. The average price of a gallon of regular gasoline reached $3.58 on April 6, the highest since September, according to AAA, the nation’s largest automobile organization. It climbed to $3.61 yesterday, the highest since August. Further improvement in the labor market will probably help sustain spending. Payrolls, excluding those at government agencies, rose by 192,000 workers in March after a 188,000 gain the previous month that was larger than first estimated, the Labor Department said last week. Private employment exceeded the pre-recession peak for the first time. The lower marks on consumer comfort were broad-based along the income ladder. Confidence among those making less than $15,000 a year dropped to minus 62.9 from minus 57.6 in the prior period. Those making between $50,000 and $74,000 had their second-most pessimistic reading in a year. Differences in readings based on partisan identification persisted, with confidence among Democrats outpacing that of Republicans by the second-widest margin in available data since mid-1990. Today’s figures also showed sentiment deteriorated to a one-year low among Midwesterners. Confidence of full-time workers also waned. The Bloomberg Consumer Comfort Index, compiled by Langer Research Associates in New York, conducts telephone surveys with a random sample of 1,000 consumers ages 18 and older. Each week, 250 respondents are asked for their views on the U.S. 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. To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net To contact the editor responsible for this story: Carlos Torres at ctorres2@bloomberg.net Vince Golle
Broad-Based Drop
Economic ‘Uncertainty’
Income Groups
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