Consumers views of the U.S. economic outlook deteriorated in September to the weakest level in a year as higher borrowing rates started to chip away at progress in the housing market.
The gap between positive and negative expectations widened to minus 9, the lowest since August 2012, from minus 5 in the prior two months, according to results of the Bloomberg Consumer Comfort Index. The weekly confidence measure rose to a one-month high of minus 29.4 from minus 32.1.
The recent cooling in the labor and housing markets points to an uneven recovery, helping explain why the Federal Reserve decided yesterday to maintain the pace of monetary stimulus. Faster job and wage growth would help ease the strain of costlier credit that’s discouraging some households from spending, which accounts for 70% of the economy.
“The decline in overall confidence is the result of a slowdown in the economy,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “This reflects rising rates and a deceleration in sensitive sectors like residential investment and home purchases.”
Another report today from the Labor Department in Washington showed fewer Americans than forecast applied for unemployment benefits last week as two states began working through a backlog of applications caused by computer-system changeovers. Jobless claims rose by 15,000 to 315,000 in the week ended Sept. 14. Economists projected an increase to 330,000.
Stocks rose, sending the Standard & Poor’s 500 Index to another record, after the Fed’s decision yesterday. The S&P 500 climbed 0.2% to 1,729.55 at 9:35 a.m. in New York.
The monthly expectations figures showed 25% of those surveyed said the economy was getting better, down from 28% in August and the smallest share in 13 months.
The weekly gauge has climbed the past two periods after tumbling almost 9 points in the month ended Sept. 1. Its recent improvement suggests the outlook may not erode much more. All three components of the weekly Bloomberg comfort index advanced.
The measure tracking Americans’ views of their personal finances rose to 1.6 last week, the first positive reading in a month, from minus 1.9. A gauge of the buying climate increased to minus 36.3 from minus 38.9. An index of current views on the economy went up to minus 53.5 from minus 55.5 the week prior.
Just as households became more pessimistic this month about the strength of the recovery, corporate officers this quarter also grew less upbeat. A survey yesterday showed fewer chief executive officers project a pickup in sales and capital spending in the next six months as the budget debate in Washington puts hiring plans on hold.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.