US consumer confidence falls to a four-month low
CONSUMER confidence in the United States fell last week to the lowest level in almost four months and more people than expected filed claims for unemployment benefits, showing a lack of progress in the job market is rattling Americans.
The Bloomberg Consumer Comfort Index dropped in the week ended May 13 to minus 43.6, a level associated with recessions or their aftermaths, from minus 40.4 in the previous period. Readings lower than minus 40 are correlated with "severe economic discontent".
Jobless applications were unchanged at 370,000 in the week ended May 12, Labour Department figures showed yesterday in Washington.
Diminishing employment gains, falling stock prices and the prospect of government gridlock over the budget heading into the November presidential election may continue to hurt household sentiment.
The lack of a sustained rebound in hiring damps the outlook for consumer spending, which accounts for about 70pc of the world's largest economy.
"A mix of policy questions and some ongoing softness in employment growth" is weighing on confidence, said Sam Coffin, an economist at UBS Securities.
"We're hearing more and more about fiscal negotiations. Last year that talk seemed to derail confidence, and that's coming up as a topic again."
Mr Coffin and the UBS team, led by Maury Harris, were the most accurate in forecasting the unemployment rate for the two years through April, according to data compiled by Bloomberg.
Other reports yesterday showed manufacturing in the Philadelphia region unexpectedly shrank this month and the index of leading indicators dropped in April for the first time in seven months.
"I do not feel like the economy has come back," said James Reid-Anderson, chairman and chief executive officer of Grand Prairie, a Texas-based theme-park operator.
"Every week there is a different story.
"One week we're up. Next week we're down, but there isn't that confidence yet that the economy is back." (Bloomberg)