Consumer Comfort in U.S. Hovered Near Record Low Last Week

Consumer Comfort in U.S. Hovered Near Record Low Last Week
Consumer confidence hovered last week near a record low as Americans turned more pessimistic about the state of the U.S. economy.
The Bloomberg Consumer Comfort Index fell to minus 50.8 in the week ended Oct. 9 from 50.2 the prior period. It was the fourth consecutive reading lower than minus 50, something that has happened just three previous times in its 26-year history.
The outlook for spending may dim as the economic recovery fails to generate enough jobs to reduce unemployment and wage gains trail inflation. Policy makers face growing discontent as political independents, homeowners, full-time workers and even the highest earners are among groups whose views are souring.
“Inflation-adjusted income gains are not sufficient to support real spending even at the current relatively restrained pace,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “The process of paring down debt, while attempting to maintain a living standard that is slipping for millions of consumers, has damaged overall consumer confidence.”
The index was minus 54 in November 2008, the lowest level since records began in 1985. The gauge has seen four-week stretches of readings lower than minus 50 just once in late 2008 and twice in 2009.
The gauge has averaged minus 46 so far this year, less than 2010’s minus 45.7.

Jobless Claims

Another report today showed the number of Americans filing claims for jobless benefits was little changed last week, showing the labor market is making scant progress. Applications for unemployment insurance payments decreased 1,000 in the week ended Oct. 8 to 404,000, the Labor Department said. The number of people on unemployment benefit rolls dropped to the lowest level in six months.
The U.S. trade deficit was little changed in August at a four-month low of $45.6 billion as exports held close to an all- time high, Commerce Department figures showed today.
Stocks declined after JPMorgan Chase & Co.’s earnings declined and the European Central Bank said forcing investors to take losses in bailouts is a risk to financial stability. The Standard & Poor’s 500 Index dropped 0.7 percent to 1,199.39 at 9:35 a.m. in New York.
Among the comfort index’s three components, the measure of the state of the economy dropped to minus 87.1 last week from minus 84.3. The share of households rating the economy as poor, 58 percent, was the highest since April 2009, in the midst of the recession.

Personal Finances

The gauge of personal finances decreased to minus 11.5 last week from minus 9.1. The buying climate index climbed to minus 53.7 from minus 57.3. It reached a three-year low of minus 61 in late September.
Levi Strauss & Co. is among companies bracing for tepid consumer spending this holiday season after back-to-school shoppers balked at paying higher prices for its namesake jeans and Dockers pants.
“It is hard to imagine a very robust holiday season compared to last year,” Chief Financial Officer Blake Jorgensen said in a telephone interview this week from San Francisco, where closely held Levi is based.
“Until you see real job growth, you’re not going to see real economic momentum,” Jorgensen said. “The U.S. has a long- term issue with unemployment that for the average consumer is going to remain challenging.”
Employers added 103,000 workers to payrolls in September, and the jobless rate was at 9.1 percent for a third consecutive month, according to Labor Department figures issued last week.

Jobless Rate

Unemployment has exceeded 8 percent since February 2009, the longest stretch of such elevated joblessness since monthly records began in 1948. Through September, the economy had recovered about 2.09 million of the 8.75 million jobs lost as a result of the 18-month recession that ended in June 2009.
Sentiment among respondents who own their homes and among registered independents dropped last week to the lowest level in data going back to 1990. Confidence for households earning more than $50,000 a year fell to the second-lowest in the data.
“Given their status as key swing voters, discontent among independents signals serious danger for political incumbents,” Gary Langer, president of Langer Research Associates LLC in New York, which compiles the comfort index for Bloomberg, said in a statement. “Incumbents are not alone in the danger zone,” he said, “also consider retailers.”
Political squabbling is among reasons consumers are losing confidence. The Senate derailed President Barack Obama’s effort to enact a $447 billion jobs plan this week, falling short of the 60 votes needed to advance the program.

Federal Reserve

Federal Reserve policy makers last month announced more unconventional measures to stimulate growth. In a bid to bring down longer-term lending rates, the central bank said it would use the proceeds from the sale of shorter-term debt to buy securities with maturities from six to 30 years.
The central bank said some officials last month wanted to keep further asset purchases as an option to boost the economy as they saw “considerable uncertainty” that growth will pick up, according to minutes of the meeting released yesterday.
The Bloomberg Consumer Comfort Index is based on responses to telephone interviews with a random sample of 1,000 consumers aged 18 and over. Each week, 250 respondents are asked for their views on the 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. The margin of error for the headline reading is 3 percentage points.
Field work for the index is done by SSRS/Social Science Research Solutions in Media, Pennsylvania.
By Carlos Torres – businessweek.com
http://economiccrisis.us/2011/10/consumer-comfort-hovered-record-week/

 

Granny says, "People handlin' their own fiscal cliffs...

Consumers Veer Away From Their Own Fiscal Cliff, Index Shows
11/16/12 --- Washington pols are squabbling over the right formula to avoid the dreaded "fiscal cliff" coming Jan. 1, when a combination of tax cuts and spending cuts come together and threaten the heath of the U.S. economy.

 

well, we must understand that most americans are not too smart, and that is why they have a lack of understanding of what confidence is.