The highest gasoline prices in two years have pinched household budgets and threaten to stem the rebound in consumer spending, the biggest part of the economy, that began last year. At the same time, a decrease in firings may help Americans overcome concern their jobs are in jeopardy, easing some of the negative effects from rising energy bills.
“Sentiment remains quite fragile,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Rising food and fuel costs are likely offsetting improvement elsewhere in the economy for households on fixed incomes and those whose wages are not sufficient to keep up with the increase in the cost of necessities.”
The minus 46 reading two weeks ago was the lowest since late November. That week’s five-point drop was the biggest setback since January 2010.
The average price of a gallon of regular gasoline at the pump increased to $3.13 on Feb. 15, the highest since October 2008, according to figures from AAA, the nation’s biggest motoring group.
Gasoline prices and the comfort index have moved in the same direction 98 percent of the time since 2004, according to calculations by Brusuelas. Changes in the four-week average of claims for jobless benefits have been in sync with the comfort gauge about 72 percent of the time.
More Americans filed applications for unemployment insurance payments last week, figures from the Labor Department showed today. The number of claims increased to 410,000 from 385,000 the prior week.
Another report from the Labor Department showed consumer prices rose 0.4 percent in January, propelled by costs of food and fuel. Excluding food and fuel, the so-called core gauge rose 0.2 percent from the prior month.
The consumer comfort survey also showed registered Republican voters have gained confidence over the past two months at the expense of Democrats.
The index for Republicans stood at minus 32.9 last week, up from minus 38 the week before. For Democrats, it was minus 48.9, up from minus 51. The 16-point difference last week was the biggest since mid-December. The spread has averaged about 31 points in favor of Republicans since this index’s inception in 1990.
The biggest political gap on record, 90 points, was in July 2004, when Republicans were optimistic and Democrats were pessimistic. Since then, Republicans have turned more pessimistic, narrowing the difference.
The mood among Republicans turned more dour than that of Democrats in December 2009 for the first time in 13 years. The last time Democrats were optimistic overall was in July 2001. Since December 2008, the month after Barack Obama was elected president, the gap has not exceeded 31 points.
Income plays a central role in shaping respondents’ views, the report showed. The index for Americans earning less than $15,000 a year was at minus 76.6 last week, compared with minus 79 the week before. For those making more than $100,000, the index fell to minus 4.6 from minus 4.
The Bloomberg Consumer Comfort Index, compiled by Langer Research Associates in New York, is based on responses to telephone interviews with a random sample of about 1,000 consumers ages 18 and over.
Each week, about 250 respondents are asked for their views on the economy, personal finances and buying climate; the percentage of negative responses is subtracted from the share of positive views and divided by three. The most recent reading is based on the average of responses over the previous four weeks.
The share of households with a positive view of the economy was 14 percent last week, little changed from the prior week.
Those with an upbeat rating on their personal finances climbed to 45 percent from 43 percent, and the share saying it was a good time to buy needed items held at 25 percent.
A separate measure of expectations showed 33 percent of those surveyed said the economy will get better. Compared with the 29 percent who said it was getting worse, the gap narrowed to 4 percentage points from a 10-point spread in favor of optimists in January. This gauge represents responses from 500 Americans interviewed in the first two weeks of each month.
Retail sales rose less than forecast in January, signaling it will be difficult for consumers to sustain last quarter’s pickup in spending without bigger gains in employment, figures from the Commerce Department showed this week.
Purchases increased 0.3 percent, the smallest gain since a drop in June. The data also indicated winter snowstorms may have played a role in the slowdown as Americans stayed away from home-improvement stores and restaurants.
BJ’s Restaurants Inc., which operates its namesake brewery, pizza and grill chains, is among companies concerned about rising fuel prices, unemployment, and home foreclosures. While Huntington Beach, California-based BJ’s sales trends have continued to be “solid” since the start of 2011, customers are under pressure, Chief Executive Officer Jerry Deitchle said on a conference call on Feb. 10
“We are still operating in a very difficult, volatile environment for consumer discretionary spending,” Deitchle said. “Consumers are facing significantly higher food and gasoline prices.”
The comfort index can range from 100, indicating every participant in the survey had a positive response to all three components, to minus 100, signaling all views were negative. The margin of error is 3 percentage points.
