US consumer comfort slumps to lowest level since January

[WASHINGTON] A sudden downturn in American households' optimism about the economy and less-favourable views of personal finances sent the Bloomberg Consumer Comfort Index reeling to its lowest point since January, a potentially adverse sign for spending, figures showed Thursday.

Highlights of Consumer Comfort (week ended July 9) Overall measure of consumer comfort dropped to 47 from 48.5 the prior week Gauge of economy declined to a seven-week low of 43.9 from 45.5 Personal finances gauge decreased to 56.2, the lowest since early February. Buying-climate measure fell to 41, matching the weakest level since January, from 42.4.

The root of the biggest two-week decline in the measure of confidence about the economy since 2011 and less optimism about households' financial well-being may lay in subdued wage growth and disappointment in Washington politics.

While stocks are hovering close to record highs, sentiment weakened particularly among those making more than US$50,000 a year, indicating respondents are increasingly doubtful Congress and President Donald Trump will pass economy-enhancing legislation, including tax reductions.

While the post-inauguration bump in sentiment has evaporated, low inflation and cheap borrowing costs remain sources of support for consumer spending.

Sentiment among those making more than US$50,000 fell to the lowest since the first week of February, while sentiment for those making less rose for the third week Comfort fell in the Northeast, Midwest and the West, while it increased in the South Optimism fell to a five-month low among political independents, while sentiment also weakened among Republicans and Democrats.

BLOOMBERG