The rocket's red glare: consumer comfort down

Consumer comfort fell last week for the first time in more than a month, ending its best quarter since the last U.S. recession began almost seven years ago on a sour note.

The Bloomberg Consumer Comfort Index fell to 36.4 in the week ending June 29, after posting gains through most of last month, from 37.1 in the prior period. The gauge averaged 35.8 from April through June, the highest quarterly reading since the last three months of 2007.

With the number of Americans hitting the road for the Fourth of July holiday weekend projected to be the highest since 2007, elevated gasoline prices will probably continue to weigh on Americans’ moods. At the same time, the biggest employment gains in eight years will give households the wherewithal to boost spending, giving the economy a lift.

“The major risk to the improvement in consumer confidence at the point is rising food and gasoline prices,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “While the price of food is likely to continue rising, the major focal point with respect to near-term confidence and household consumption will be if the price of gasoline peaks the week of the July 4 holiday, as it traditionally does, or continues to rise due to geopolitical tensions in the middle east.”

Employment and housing figures have buoyed confidence. The Labor Department’s payrolls data today showed employment climbed by 288,000 in June, exceeding the median forecast of economists surveyed by Bloomberg. The jobless rate unexpectedly dropped to 6.1 percent, the lowest in almost six years.

‘Flat’ earnings

“While, the June jobs report is very encouraging, average hourly earnings remains flat at roughly 2 percent,” blunting some of the optimism, Brusuelas said.

The Dow Jones Industrial Average climbed above 17,000 for the first time on the improving labor market. The Standard % Poor’s 500 Index climbed 0.3 percent to 1,980.81 at 9:40 a.m. in New York.

In the final week of the quarter, Americans were a little more downcast across the board. Each of the three components of the comfort index slipped. Americans’ view of the buying climate lost 1.7 points, dropping for the first time in five weeks to 31, while their assessment of personal finances decreased to 50.9 from 51.1.

The gauge for the state of the economy was little changed at 27.3, losing 0.1 points from the week before, which was the best reading since August.

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