Consumer Confidence in U.S. Drops for Sixth Consecutive Week


iYFcDVi..rKoConsumer confidence in the U.S. fell for the sixth week in a row, reaching the lowest level in a year as Americans struggled to make ends meet.

Thank you for reading this post, don't forget to subscribe!

The Bloomberg Consumer Comfort Index declined to minus 37.9 in the week ended Nov. 3, the worst reading since October 2012, from minus 37.6. The one-week drop was the smallest since the partial government shutdown ended in the middle of last month.

A slowdown in hiring brought on by the fiscal gridlock in Washington, combined with the troubled rollout of the Obama administration’s online health-care exchanges, may damp sentiment ahead of the holiday-shopping season. At the same time, gains in equities and property values are sustaining higher-income earners, leading to the biggest divergence in attitudes in three years.

“Concerns about personal finances and deterioration in the buying climate underscore further declines in consumer comfort,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “It will be interesting to see if the botched launch of Obamacare weighs on spending decisions.”

Other reports today showed economic growth unexpectedly accelerated in the third quarter, led by the biggest increase in inventories in more than a year, and fewer Americans filed applications for unemployment benefits last week.

Gross domestic product rose at a 2.8 percent annualized rate after a 2.5 percent gain the prior three months, a Commerce Department report. The median forecast of economists surveyed by Bloomberg called for a 2 percent advance. Consumer spending climbed 1.5 percent, the smallest increase since 2011.

Jobless Claims

Jobless claims decreased by 9,000 to 336,000 in the period ended Nov. 2, according to the Labor Department.

Stocks rose as the European Central Bank cut a key interest rate. The Standard & Poor’s 500 Index increased 0.1 percent to 1,772.81 at 9:39 a.m. in New York.

Two of the Bloomberg index’s three components retreated last week. The buying-climate measure fell to minus 42, a five-month low, from minus 41. The gauge of personal finances slipped to minus 4.9, the worst reading since December, from minus 3.8 the previous week.

The index assessing current views on the economy improved to minus 66.7 from minus 68, which was the second-weakest reading since October 2012.

The Bloomberg comfort gauge has fallen 9.8 points since the period ended Sept. 22, compared with a loss of 5 points during the first of two 1995-1996 government shutdowns. For the 21-day shutdown that ended Jan. 6, 1996, the index declined 8 points, half of them in the two weeks after the government reopened.

Payrolls Gains

Tepid progress in the labor market has chipped away at moods. Employers added 120,000 workers to payrolls last month, after a 148,000 advance in September, according to the median estimate in a Bloomberg survey before tomorrow’s Labor Department figures. The jobless rate probably rose to 7.3 percent from an almost five-year low of 7.2 percent in September, the report is also projected to show.

With households reporting increased wariness about their finances, some companies like Red Robin Gourmet Burgers Inc., based in Greenwood Village, Colorado, are grappling with the prospect of slowing sales.

The outlook for casual dining “is fairly pessimistic in the near term with consumer confidence down and little expected improvement in employment, retail sales or discretionary spending in restaurants,” Chief Financial Officer Stuart Brown said on a Nov. 5 earnings call.

Home Prices

In the weeks before the holiday retail season, rising home prices and lower fuel costs may counter the damage.

Home prices climbed in 88 percent of U.S. cities in the third quarter from a year earlier, a report by the National Association of Realtors showed this week.

Cheaper fuel costs are also underpinning household budgets. The average cost of a gallon of regular-grade gas fell to $3.23 on Nov. 5, the lowest since December, according to data from AAA, the country’s biggest auto group. Since the end of August, fuel prices have dropped 36 cents per gallon.

Today’s confidence figures showed the widest gap in three years between the highest- and lowest-earning groups surveyed. The reading for those making at least $100,000 a year rose to 17.1 from 13.7 a week earlier. For respondents with annual incomes less than $15,000, sentiment eroded to minus 72.7, the lowest since September 2012, from minus 69.3.

Confidence dropped to a more than one-year low for men, young adults and blacks, today’s survey showed. The gauge for unemployed respondents was the weakest since November 2012.

Telephone Surveys

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 margin of error for the headline figure is 3 percentage points.

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.

Babatunde Akinsola
Babatunde Akinsola
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

Share post:



More like this

NAFDAC shuts down bakery for using unfortified sugar, others in Sokoto

July 19, 2024. Azonuchechi Chukwu. The National Agency for Food Drugs...

Over 263 Boko Haram Terrorists Surrender to MNJTF

July 19, 2024. Azonuchechi Chukwu. The Multinational Joint Task Force (MNJTF)...

CBN directs BDCs to cap forex profits at 1.5%

July 19, 2024. Azonuchechi Chukwu. The Central Bank of Nigeria(CBN) on...

Naira Depreciates to N1,572/$ in Parallel Market

July 19, 2024. Azonuchechi Chukwu. The Nigerian Naira on Thursday depreciated...
× How can I help you?