Gas Prices Push U.S. Consumer Comfort to Three-Month Low

(Bloomberg) -- U.S. household sentiment dropped last week to the lowest level since early February as views of the buying climate and personal finances dimmed, possibly reflecting higher fuel prices and unimpressive wage growth, the Bloomberg Consumer Comfort Index showed Thursday.

Highlights of Consumer Comfort (Week Ended May 6)

  • Weekly comfort index declined to 55.8 from 56.5; down 2.3 points in last three weeks, most since September 
  • Comfort index of buying climate slipped to an eight-week low of 47.5 from 48.6; down 3.6 points in last three weeks, also most since September
  • Personal finances measure dropped for a fourth week, to 62.7, lowest since March 11, from 63.3
  • Gauge tracking views of the economy fell to 57.2, weakest reading since January, from 57.6

Key Takeaways

Americans are growing more unsettled amid the highest gasoline prices since November 2014, as well as modest wage growth despite the lowest unemployment rate since 2000. Consumer comfort has declined three straight weeks since reaching a 17-year high in mid-April.

The risk for the economy is if the setback in sentiment adversely affects household shopping habits after a first quarter that saw the slowest pace of consumer spending in nearly five years. At the same time, consumer comfort remains historically high, as more people are being pulled into a tight labor market and tax cuts are boosting take-home pay.

Higher fuel costs tend to have a bigger financial impact on lower-income individuals, and the gauge of comfort among those earning less than $15,000 a year declined. Sentiment of those at the top of the income scale also fell.

Other Details

  • Sentiment decreased in Midwest and West, while climbing in the Northeast and South
  • Comfort among Hispanics rises to highest in data back to July 2012

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