Consumer Confidence in U.S. Increases to Three-Year High
U.S. Consumer Confidence Rose in February to Three-Year High
Jin Lee/Bloomberg
A shopper carries a Hennes & Mauritz (H&M) bag while walking past Macy's Herald Square store in New York.
A shopper carries a Hennes & Mauritz (H&M) bag while walking past Macy's Herald Square store in New York. Photographer: Jin Lee/Bloomberg
Feb. 22 (Bloomberg) -- Karl Case, co-creator of the S&P/Case-Shiller Index, discusses today's report and the outlook for the U.S. housing market. The index of home values in 20 cities fell 2.4 percent in the 12 months to December, the biggest year-over-year decrease since December 2009, the group said today. The median forecast of economists surveyed by Bloomberg News projected a 2.3 percent decline. Case talks with Tom Keene and Ken Prewitt on Bloomberg Television's "In the Loop." (Source: Bloomberg)
Feb. 22 (Bloomberg) -- Robert Wetenhall, an analyst with RBC Capital Markets, talks about the outlook for U.S. housing and education stocks. He speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)
Feb. 22 (Bloomberg) -- Hugh Johnson, chairman and chief investment officer of Hugh Johnson Advisors LLC, discusses the outlook for the U.S. equity market and economy. Johnson, speaking with Betty Liu and Jon Erlichman on Bloomberg Television's "In the Loop," also talks about the impact of protests in Libya on the oil market. (Source: Bloomberg)
Feb. 22 (Bloomberg) -- Robert Shiller, an economics professor at Yale University and co-creator of the S&P/Case-Shiller index of property values, discusses today's report and the outlook for the U.S. housing market. The index of home values in 20 cities fell 2.4 percent in the 12 months to December, the biggest year-over-year decrease since December 2009, the group said today. The median forecast of economists surveyed by Bloomberg News projected a 2.3 percent decline. Shiller talks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)
Confidence among U.S. consumers rose in February to the highest level in three years as Americans became more optimistic about their incomes and the economy.
The Conference Board’s index of sentiment increased to 70.4, the highest since February 2008, from 64.8 the prior month, figures from the New York-based private research group showed today. Economists projected the gauge would be little changed at 65.5, according to the median forecast in a Bloomberg News survey.
A pickup in optimism and job gains may encourage Americans to increase purchases, bolstering consumer spending, the biggest part of the economy. At the same time, unemployment at 9 percent or higher for almost two years and mounting home foreclosures threaten to restrain households.
“The consumer believes that growth is picking up pace,” said Jonathan Basile, senior economist at Credit Suisse in New York, whose forecast of 70 for the index was the most accurate. “The ducks are in a row for stronger consumer spending this year.”
Stocks held losses after the report as crude oil prices jumped on concern over rising unrest in North Africa and the Middle East. The Standard & Poor’s 500 Index fell 0.8 percent to 1,332.56 at 11:01 a.m. in New York. Treasury securities rose, pushing down the yield on the benchmark 10-year note to 3.50 percent from 3.59 percent late yesterday.
Bloomberg Index
The Conference Board’s measure contrasts with the Bloomberg Consumer Comfort Index, which held near a two-month low last week. The Bloomberg gauge, formerly the ABC News U.S. Weekly Consumer Comfort Index, was minus 43.4 compared with minus 46 the prior week.
The measure often mirrors changes in prices Americans pay at the gas pump, whereas changes in the labor market have more of an influence on the Conference Board’s confidence index.
The share of Americans who said they expect their incomes to increase in the next six months rose to 17.3 in February from 15.3 a month earlier, today’s data showed. Those who said jobs were currently plentiful rose to 4.9 this month from 4.6, the fourth straight gain.
The Conference Board’s measure of present conditions climbed to 33.4 in February from 31.1, the fifth consecutive increase.
Estimates of the consumer confidence in the Bloomberg survey of 67 economists ranged from 58.5 to 70. The Conference Board last week revised the data back to November after announcing changes in its sampling methodology. The measure averaged 97 in the six years leading up to the recession that began in December 2007 and ended in June 2009.
Michigan Gauge
The gain compares with the Feb. 11 Thomson Reuters/University of Michigan preliminary consumer sentiment index, which rose this month as falling unemployment and rising stock prices lifted U.S. households.
A report earlier today showed housing prices fell in December. The S&P/Case Shiller index of home values in 20 cities dropped 2.4 percent from December 2009, the biggest decrease in a year.
The Conference Board’s index of expectations for the next six months rose to 95.1 from 87.3.
The percent of respondents expecting more jobs available in the next six months slipped to 19.8 from 20.8 the previous month.
Jobs Hard to Get
The share of consumers who said jobs are hard to get decreased to 45.7 percent from 47 percent.
Confidence rose in two of nine U.S. regions, led by the East North Central, which includes Michigan and Ohio.
Americans stepped up their purchases in the final three months of 2010. Consumer spending grew at a 4.4 percent annual pace, the fastest since the last quarter of 2004, according to a Jan. 28 Commerce Department report.
Home Depot Inc., the world’s largest home-improvement retailer, this month said it is hiring more than 60,000 temporary workers in the U.S., as well as adding permanent employees for the second year in a row.
The Atlanta-based company is boosting staff as it prepares for the biggest selling season of the year, March through mid- June, Craig Menear, executive vice president of merchandising, said in a telephone interview Feb. 14.
Still, Federal Reserve Chairman Ben S. Bernanke in Senate testimony on Jan. 7 said it may take five years for the labor market to “normalize fully.” Unemployment fell to 9 percent in January from 9.4 percent a month earlier as the U.S. added 36,000 jobs, according to Labor Department figures released Feb. 4.
Tax Cuts
President Barack Obama on Dec. 17 signed into law an $858 billion bill that extended for two years tax cuts for all income levels. The measure also expanded jobless insurance benefits to the long-term unemployed for 13 months and reduced payroll taxes for workers by two percentage points this year.
At the same time, people are paying more at the pump, which may limit spending on other goods and services. The average price of a gallon of gasoline rose to $3.16 on Feb. 17, the highest since October 2008, according to AAA. Prices of regular- grade gasoline have exceeded $3 a gallon since Dec. 21.
To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz cwellisz@bloomberg.net
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