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Consumer Comfort in U.S. at Highest Level Since ‘08

(Corrects Feb. 20 index level in second paragraph of article published on Feb. 24, sub-indexes in paragraphs 13-15, table at end.)

Consumer confidence climbed last week to the highest level since April 2008 as Americans grew less pessimistic about their finances.

The Bloomberg Consumer Comfort Index, formerly the ABC News U.S. Weekly Consumer Comfort Index, was minus 39.6 in the period to Feb. 20, compared with minus 43.4 the prior week, a report today showed. Forty-nine percent of those polled held positive views on their financial situation, the most in a year.

The biggest two-month drop in the jobless rate since 1958 may be helping lift households’ spirits, boosting the odds that spending, which accounts for about 70 percent of the economy, will keep growing. Higher gasoline prices will remain a hurdle as political tensions in oil-exporting countries push up the cost of crude.

“We’re gradually moving in the right direction,” said Harm Bandholz, chief U.S. economist at UniCredit Group in New York. “It’s a combination of the stock market rally and the labor market, but confidence is still at very depressed levels. We may see some impact from gasoline prices” in coming weeks.

Less unemployment, a growing economy and increases in stocks are helping offset negative forces, including higher fuel costs and a troubled housing market, said Gary Langer, president of Langer Research Associates LLC in New York, which compiles the index for Bloomberg. Readings of minus 40 have historically been the threshold indicating Americans think a recovery from recession has begun, he said.

‘Miles to Go’

The index’s gain is “a significant advance in its struggle to return to levels associated with economic growth,” Langer said in a statement. “There are still miles to go.”

The number of Americans filing first-time claims for unemployment insurance last week fell more than estimated, a Labor Department report showed today. Claims decreased to 391,000 from 413,000 the prior week. Economists forecast claims would drop to 405,000, according to the median estimate in a Bloomberg News survey.

Other reports today showed purchases of new homes fell in January more than forecast by economists, and orders for durable goods climbed as demand for aircraft rebounded.

Stocks fell, depressed by concern that rising oil prices will slow the global recovery. The Standard & Poor’s 500 index dropped 0.4 percent to 1,302.4 at 11:50 a.m. in New York.

Large Moves

The four-point gain in the comfort index last week follows a five-point increase in early January. The gauge dropped five points in the week ended Feb. 6, the biggest setback since January 2010.

Movements of that magnitude are unusual because the index is based on a four-week average, Langer said. Nonetheless, the gauge is mimicking the shifts seen in a 10-week span in mid- 1993, when the economy was also recovering from a recession.

The Bloomberg Consumer Comfort Index is based on responses to telephone interviews with a random sample of 1,000 consumers aged 18 and over.

Each week, 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 share of households with a positive view of the economy rose to 15 percent, the most since September 2008, from 14 percent the prior week. Those saying it was a good time to buy needed items rose to 27 percent, compared with 25 percent the previous week.

Beating Estimates

Macy’s Inc. (M), the second-biggest U.S. department-store chain, is among companies counting on shoppers to keep spending. The Cincinnati-based retailer this week reported earnings that beat analysts’ estimates as it controlled costs and sold exclusive holiday gifts.

“We are entering the year with building momentum, which gives us confidence that we should have another strong year,” Karen Hoguet, chief financial officer, said on a conference call with investors on Feb. 22.

Women registered the sharpest advance in confidence last week, gaining 8.1 points, the biggest increase since July 2007, to minus 43. The reading for men was little changed.

Survey respondents’ views varied sharply based on income levels, today’s report showed. The index for Americans earning less than $15,000 a year was at minus 68.9 last week, compared with minus 76.6 the week before. For those making more than $100,000, the index improved to 0.1 from minus 4.6.

Employment Status

Confidence improved to minus 24.8 among those holding a full-time job, compared with minus 52.4 for part-timers.

Gasoline prices and the comfort index have moved in the same direction 98 percent of the time since 2004, according to calculations by Joseph Brusuelas, a senior economist at Bloomberg LP in New York. 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.

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.

The responses are broken down by participants’ sex, age, income level, race, region of residence, political affiliation, marital and employment status.

Field work for the index is done by SSRS/Social Science Research Solutions in Media, Pennsylvania.

          Bloomberg Weekly Consumer Comfort Index Table

======================================================
                  Feb. 20  Feb. 13   Feb. 6  Jan. 30
                     2011     2011     2011     2011
======================================================
Overall index       -39.6    -43.4    -46.0    -41.0
------------------------------------------------------
State of Economy      -69.4     -72      -74      -72
 Positive Net          15.3     14       13       14
  Excellent             0.7      1        1        1
  Good                 14.6     14       12       13
 Negative Net          84.7     86       87       86
  Not-so good          42.9     46       50       51
  Poor                 41.8     40       37       35
------------------------------------------------------
======================================================
                  Feb. 20  Feb. 13   Feb. 6  Jan. 30
                     2011     2011     2011     2011
======================================================
Personal Finances      -2.3     -9      -14       -8
 Positive Net          48.9     45       43       46
  Excellent             5.3      5        4        4
  Good                 43.6     40       39       42
 Negative              51.1     55       57       54
  Not-so good          33.6     37       38       35
  Poor                 17.5     18       19       19
------------------------------------------------------
Buying Climate        -47.1    -49      -50      -44
 Positive Net          26.5     25       25       28
  Excellent             3.6      3        2        2
  Good                 22.9     22       23       26
 Negative              73.5     75       75       72
  Not-so good          48.8     48       47       45
  Poor                 24.7     27       28       27

Demographic Data Follows (see ALLX COMF for data tickers):
======================================================
                  Feb. 20  Feb. 13   Feb. 6  Jan. 30
                     2011     2011     2011     2011
======================================================
                 ------------------------ Sex --------
 Men                -36.0    -35.2    -37.0    -33.0
 Women              -43.0    -51.1    -53.0    -49.0
                 ------------------------ Age --------
18-34               -30.4    -35.7    -42.0    -32.0
35-44               -51.4    -50.3    -54.0    -48.0
45-54               -36.4    -44.4    -40.0    -40.0
55-64               -47.6    -50.9    -49.0    -50.0
65+                 -40.3    -41.8    -43.0    -44.0
                 ----------------------- Region -----
NorthEast           -40.0    -45.5    -42.0    -43.0
MidWest             -36.8    -40.8    -45.0    -45.0
South               -40.6    -44.0    -46.0    -38.0
West                -40.2    -43.3    -46.0    -42.0
                 ------------------------ Race ------
White               -35.5    -40.3    -41.0    -38.0
Black               -59.6    -56.6    -58.0    -58.0
=====================================================
                  Feb. 20  Feb. 13   Feb. 6  Jan. 30
                     2011     2011     2011     2011
=====================================================
                 ----------------------- Income -----
<$15K               -68.9    -76.6    -79.0    -78.0
$15K To $24.9K      -72.8    -61.9    -48.0    -50.0
$25K To $39.9K      -55.7    -53.9    -62.0    -64.0
$40K To $49.9K      -39.4    -44.9    -45.0    -47.0
$50K+               -15.5    -20.9    -25.0    -21.0
$50K To $74K        -37.5    -46.9    -52.0    -48.0
$75K To $99K         -7.5    -18.6    -18.0    -18.0
$100K+                0.1     -4.6     -4.0     10.0
                 ------------------ Political Party -
Republican          -26.2    -32.9    -38.0    -36.0
Democrat            -40.0    -48.9    -51.0    -47.0
Independent         -44.8    -41.3    -39.0    -35.0
                 --------------------- Education ----
<HS                 -56.0    -68.4    -60.0    -63.0
HS Grad             -45.4    -42.8    -48.0    -42.0
Coll+               -31.4    -37.4    -39.0    -36.0
=====================================================
                  Feb. 20  Feb. 13   Feb. 6  Jan. 30
                     2011     2011     2011     2011
=====================================================
                 ------------------- Homeownership --
Own                 -37.7    -43.4    -43.0    -38.0
Rent                -45.8    -44.7    -51.0    -50.0
                 ------------------- Martial Status -
Single              -46.6    -45.4    -50.0    -36.0
Married             -26.9    -31.1    -32.0    -33.0
Sep/Wid/Div         -63.5    -68.6    -68.0    -66.0
                 --------------------- Employment ---
Full-Time           -24.8    -26.5    -27.0    -25.0
Part-Time           -52.4    -65.1    -62.0    -71.0
Not Employed        -49.3    -51.1    -55.0    -48.0
------------------------------------------------------

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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