Gasoline prices hovering close to $4 a gallon and rising grocery bills mean fewer dollars for Americans to spend on less necessary items. Retailers like Wal-Mart Stores Inc. are among those seeing sales drop as energy prices climb, pointing to a slowdown in consumer purchases, which account for about 70 percent of the economy.
“A persistent pessimism has settled in among the American public, suggesting a rough second quarter for the U.S. consumer and economy,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Stagnant wages and an elevated level of unemployment are the probable causes behind the bleak view of the state of the national economy and household finance.”
Another report today showed fewer Americans than forecast filed applications for unemployment benefits last week, making it more likely that the April surge in applications was caused by temporary events rather than deterioration in the labor market.
Jobless claims declined by 29,000 to 409,000 in the week ended May 14, the fewest in a month, Labor Department figures showed. The median estimate of economists in a Bloomberg News survey called for a drop to 420,000.
Stocks rose on the improvement in claims. The Standard & Poor’s 500 Index climbed 0.2 percent to 1,343.9 at 9:40 a.m. in New York. Treasury securities fell, pushing the yield on the benchmark 10-year note up to 3.23 percent from 3.18 percent late yesterday.
Each of the three components of the Bloomberg comfort index-personal finances, buying conditions and economic conditions-dropped last week, the report showed.
The personal-finances gauge fell to minus 16.5 from minus 10.6 the previous week. A gauge of Americans’ views of the economy, at minus 75.6, was little changed from minus 75 the previous week, and the buying-climate index was at minus 56.1, a two-month low.
“Blame gasoline prices,” Gary Langer, president of Langer Research Associates LLC in New York, which compiles the index for Bloomberg, said in a statement. “Consumer sentiment suffers when gas rises steeply for an extended period.”
Bloomberg’s gauge of economic expectations, issued once a month, held at minus 16, the lowest since September. The measure is in line with a component of the Thomson Reuters/University of Michigan sentiment index, which also showed no deterioration in Americans’ economic outlook even as their assessment of current conditions flagged.
This is the first time since January that the measure of the economic outlook hasn’t weakened, said Langer, citing it as one of the “glimmers” of hope in the report.
The comfort index for consumers in the West fell to the lowest level since record-keeping began in 1990. Gasoline prices in the region were about $4.12 a gallon last week, compared with the national average of $3.97 during the same period.
Sentiment among younger adults decreased to the lowest in almost two years, the report showed. Confidence among those who identify themselves as Independent, neither Democrat nor Republican, dropped to the lowest level since October 2009.
The comfort index was higher for Democrats than for Republicans for a fifth straight week, which has happened just once before, in late 1996. The index for Republicans was minus 46.7, little changed from minus 46.8 a week earlier. The gauge for Democrats was minus 43.7, down from minus 38.9.
Wal-Mart, the world’s largest retailer, this week said profit grew 3.8 percent in the first quarter from the same time last year as sales abroad made up for declining U.S. demand.
Sales at U.S. Wal-Mart stores open at least a year dropped 1.1 percent, the eighth decline in a row. Customers are still struggling with economic uncertainty, buying more generic items rather than their more costly name-brand counterparts, executives said in a May 17 pre-recorded call.
Customers are making fewer trips to stores because of the increase in fuel prices, U.S. stores chief Bill Simon said on the call.