Breaking News

Tweet TWEET

Most Americans in Decade Project Economy Will Get Better

Photographer: Patrick Fallon/Bloomberg

Sears employees prepare furniture for a customer in Torrance, California. Close

Sears employees prepare furniture for a customer in Torrance, California.

Close
Open
Photographer: Patrick Fallon/Bloomberg

Sears employees prepare furniture for a customer in Torrance, California.

More Americans this month said the world’s largest economy will improve than at any time in the past decade, led by a surge among Democrats following the re- election of President Barack Obama.

The share of households projecting the economy will get better rose to 37 percent in November, the highest since March 2002, according to a survey accompanying the Bloomberg Consumer Comfort Index. That propelled the survey’s monthly consumer expectations gauge to 4 from minus 7. Jobless claims fell last week, while the index of leading economic indicators advanced in October, other reports showed.

Rising home values, job growth and falling gasoline prices are shoring up household finances as retailers such as Kohl’s Corp. (KSS) prepare for the holiday shopping season. Improved consumer spending will help sustain the expansion as lawmakers strive to avoid the so-called fiscal cliff of tax increases and spending cuts, an outcome that Federal Reserve Chairman Ben S. Bernanke said will put the economy on firmer footing in 2013.

“The outlook is better than it has been over the last three or four years -- that’s what Bernanke told us yesterday,” said Harm Bandholz, chief U.S. economist at UniCredit Group in New York, who correctly projected the 0.2 percent rise in the leading index. “The recovery is gaining momentum. When the fiscal cliff is sorted out, I think growth will go up.”

Photographer: Patrick Fallon/Bloomberg

Growing confidence may lead to a pickup in spending, which makes up about 70 percent of the economy. Close

Growing confidence may lead to a pickup in spending, which makes up about 70 percent of the economy.

Close
Open
Photographer: Patrick Fallon/Bloomberg

Growing confidence may lead to a pickup in spending, which makes up about 70 percent of the economy.

U.S. stocks rose, sending the Standard & Poor’s 500 Index up a fourth day, as Israel and the Palestinian militant group Hamas agreed to a cease-fire. The S&P 500 advanced 0.2 percent to 1,391.01 at 4 p.m. New York time. The yield on the 10-year Treasury note rose to 1.68 percent from 1.67 percent.

Rising Sentiment

Elsewhere, Japan is suffering its worst year for exports since the global contraction of 2009 as Europe’s crisis and China’s slowdown hurt manufacturers. Shipments totaled 53.5 trillion yen ($653 billion) for January through October, down 2.3 percent from the same period in 2011, according to data compiled by Bloomberg from Finance Ministry figures released in Tokyo today. The trade deficit for 2012 so far is a record 5.3 trillion yen.

In Britain, the budget deficit unexpectedly widened in October as government spending surged and the economic slump hit tax revenue from company profits.

The U.S. Labor Department said today that fewer Americans filed applications last week. Jobless claims decreased by 41,000 to 410,000 in the week ended Nov. 17 as damage to the labor market caused by superstorm Sandy began to subside.

The 0.2 percent rise in the Conference Board’s leading economic index followed a 0.5 percent advance a month earlier. Economists projected the New York-based group’s gauge would rise 0.1 percent, according to the Bloomberg survey median.

Democrats, Republicans

Today’s Bloomberg gauge showed the jump in expectations this month was the biggest among registered Democrats, with 63 percent indicating the economy will improve, up 12 percentage points from October. Among independents, 26 percent had a positive response, while 15 percent of Republicans answered affirmatively, both little changed from October.

“The gain is largely political in nature, occurring very disproportionately among Democrats,” said Gary Langer, president of Langer Research Associates in New York, which compiles the index for Bloomberg. “Gains in views the economy is improving, to be truly persuasive, will need to be more broadly based.”

Meantime, the weekly Bloomberg Consumer Comfort Index was at minus 33.9 in the period ended Nov. 18, hovering near a seven-month high of minus 33.1 the prior week.

State of Economy

Two of the three components of the weekly index fell. The measure on perceptions of the current state of the economy declined to minus 58.9 from a four-year high of minus 56.6 the prior week. The buying climate index fell to minus 38.6 from minus 37.6.

The barometer measuring Americans’ views of their personal finances rose to minus 4.2 from minus 5.1 the previous week.

“Here in the U.S., I have seen some signs of modest economic recovery and improving consumer confidence,” William Johnson, chief executive officer of Pittsburgh-based H.J. Heinz Co., the world’s biggest ketchup maker, said on a Nov. 20 earnings conference call. “I don’t expect robust economic growth in the U.S. in 2013, but I am encouraged by the progress in our U.S. business.”

A budding housing recovery is helping to shore up household wealth. New-home construction climbed to a four-year high in October, the Commerce Department said yesterday. Sales of existing homes were stronger than forecast last month, and an index of homebuilder sentiment rose in November to a six-year high.

Cheaper Gasoline

Cheaper gasoline may also be contributing to the rise in sentiment. The average nationwide cost for regular gasoline dropped to $3.41 a gallon on Nov. 19, the lowest since July, according to data from AAA, the largest U.S. auto group. The price at the pump reached a 2012 high of $3.94 on April 4.

Gains in the labor market are also boosting Americans’ moods. The economy added 171,000 jobs in October, exceeding the 157,000 average so far this year, according to the latest data from the Labor Department.

Avoiding the fiscal cliff will improve the economy’s prospects, Bernanke said yesterday at the Economic Club of New York.

“There’s important potential for the economy to strengthen significantly if there’s a greater level of security and confidence about where we’re going,” he said. “A plan for resolving the nation’s longer-term budgetary issues without harming the recovery could help make the new year a very good one for the American economy.”

Bernanke, 58, identified the threat of $607 billion in automatic tax increases and spending cuts set to take effect next year as one of the impediments to a faster expansion as companies hold back on hiring and investment. The Fed chief repeated his warning a failure to reach an agreement could send the economy “toppling back into recession.”

To contact the reporter on this story: Elizabeth Dexheimer in New York at edexheimer@bloomberg.net

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.