Weekly Consumer Comfort Index Tumbles To Lowest Since October 2012

If US consumers were miraculously supposed to regain all their confidence when the government reopened (even if companies completely ignored said shutdown according to the epic jump in the Chicago PMI – the biggest jump in 30 years), so far that has failed to happen based on the latest weekly Bloomberg consumer comfort index, which moments ago hit -37.6 down from -36.1 a week earlier, its lowest print since October 2012. With this drop the index has extended its five-week retreat that accelerated during the federal government’s partial shutdown and has slowed – but not stopped – in the two weeks since. Today the index is 21.3 points worse than its long-term average and 6.3 points worse than this year’s average. And what is more worrisome for The Fed, they have lost “the rich” as the comfort of the highest income survey participants has fallen to its lowest in 7 months – collapsing back to its ‘normalized’ divide with the ‘poor’.

The rich just aren’t feeling Mr. Chairwoman’s love anymore:

The CCI, produced for Bloomberg by Langer Research Associates, is based on Americans’ ratings of the national economy, the buying climate and their personal finances. At -68.0, the national economy subindex is little changed from last week’s -68.2, its worst since early October 2012. Consistently the most pessimistic gauge of the CCI, the subindex is 36.8 points worse than its average since late 1985. Forty-two percent call the national economy “poor” – the worst possible rating – the most in more than a year.

While better, the other two subindices are struggling as well. The buying climate subindex is its worst since early June, -41.0. The personal finances subindex, at -3.8 this week, matches its lowest since early December. They’re 12.5 and 14.5 points off their respective averages.

And while traditionally, it was the poor who had the least confidence in the economy, now the rich are catching up too: The CCI stands at +13.7 among those with annual household incomes of $100,000 or more, in positive territory for 39 weeks straight but its lowest in six weeks. By contrast it’s -69.3, its worst since early September, among those earning less than $15,000; the 83.0-point gap is its largest in three months. The gap also remains vast among those earning less $50,000 (-57.8) vs. those with incomes of $50,000 or more, -8.7.

The details: At -37.6 on its scale of -100 to +100, the CCI has lost a steep 9.5 points since Sept. 22. An unusual 4.4-point, one-week drop in the midst of the shutdown eased to 2.0 points last week and 1.5 points this week – a deceleration that holds out hope the index can stabilize. As Bloomberg adds, “the CCI’s trajectory is still downward, the future uncertain and history only a rough guide. The index lost 5 points in the first of the 1995-6 shutdowns, then stabilized promptly. In the second, it lost 8 points, half of them in the two weeks after that shutdown ended – then recovered.”

The CCI’s recent troubles represent a significant reversal of fortune. After a run in the -30s to -50s dating to February 2008, it broke into its recovery zone, the -20s, in mid-April, and held there for 17 of the next 19 weeks. It fell in August, then started inching back in September – until the budget battle and resulting shutdown hit.

Some other data show clouds. Retail sales were down 0.1 percent in September. Home prices rose, but at a slowed pace. And the National Association of Realtors’ pending home sales index, a strong correlate of consumer sentiment, dropped 5.6 percent to its lowest since December, its largest decline since May 2010.

Among groups, the CCI is its worst among political independents, -45.7, since mid-September 2012. It is higher numerically among Democrats (-27.2) than Republicans (-29.8) for the first time since late August (before which the index was higher among Democrats than Republicans for a record 75 weeks in a row). Suggesting that bruises from the budget battles may be catching up with the GOP faithful, the index has lost 14.5 points among Republicans since mid-September (when it hit its best since September 2008). Among Democrats, it’s up by a scant 1.9 points.

The stock market, for its part, is usually another correlate of consumer sentiment – but sometimes other forces induce them to part ways, as is apparent now. And when confidence no longer has a reflexive relationship with stocks, run Forrest, run.

The index has dropped among some traditionally advantaged groups recently. Its -33.0 among men is its worst since February, down by 16.5 points since just before the shutdown. That compares with -41.9 among women, much worse, but down by just 3.0 points in the same period. The gap between the two groups is its smallest since early June.

Among those who have been to college, the index, at -26.7, is down by 13.1 points since mid-September. It’s down by just 2.2 points, by comparison, among high-school graduates (to -48.0), with the gap between the two groups also its smallest since summer.

The CCI is lowest since at least early April among homeowners (-27.3, vs. -52.3 among renters); among full-time workers (-27.7, vs. -44.6 among those not employed for pay); and married adults, at -32.3, vs. -52.5 among those who are separated, widowed or divorced.

In other words: suddenly nobody is confident… five years into the Fed’s most aggressive wealth transfer plan ever conceived.