The Bloomberg Consumer Comfort Index was created in 1985. It measures perceptions on the state of the economy, personal finances and whether it’s a good time to buy goods or services. The index is updated weekly, making it a timely sentiment gauge. The index is based on a telephone survey of 1,000 adult consumers. 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 index is based on the average of responses over the previous four weeks and can range from a high of 100 to a low of minus 100.
Consumer confidence was little changed in the first week of October at -29.7, even as the government’s partial shutdown made Americans less optimistic about the economy. This was, however, the lowest level in over 6 months, reflecting what other private economic data are showing. According to Joseph Brusuelas, a senior economist at Bloomberg, “Upper-end households, who are thriving in the current environment, remain confident,” which could be holding the index up even as lower-income households are squeezed.
The Bloomberg comfort index tracks fairly well with other economic data, and continues to suggest that the business cycle in not generating the income, jobs, and other economic activity that is needed to push the economy forward in a meaningful way. Business investment, business startups, labor force participation and hiring are all showing long term weakness that even huge monetary and fiscal stimulus efforts have not been able to overcome. This is something that those working in most industries need to keep in mind when looking at expansion plans.