Consumer Comfort in U.S. Improves to Highest Level Since April

Confidence among U.S. consumers climbed for a sixth straight week to the highest level since April as a rally in stock prices and improving job market boosted Americans’ view of their finances.

The Bloomberg Consumer Comfort Index advanced to minus 31.6 in the week ended March 10 from minus 32.4 in the prior period. The gauge of personal finances reached an eight-month high.

A pickup in employment and the longest rally in the Dow Jones Industrial Average since 1996 may keep lifting sentiment, sustaining the unexpected strength in consumer spending seen so far this year. Gains in asset values, including the rebound in home prices, shows Federal Reserve stimulus policies aimed at helping Americans repair tattered finances are paying off.

“I think we’ve got real evidence of a modest wealth effect, which is the direct goal of Federal Reserve policy,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “It’s bolstering consumer sentiment.”

Another report today showed the number of Americans who filed for unemployment benefits unexpectedly declined last week to the lowest level in almost two months, adding to signs the labor market is strengthening.

First-time jobless claims fell by 10,000 to 332,000 in the week ended March 9, the fewest since mid-January, according to data today from the Labor Department in Washington. The median forecast of 49 economists surveyed by Bloomberg called for an increase to 350,000. The four-week average declined to a five- year low.

Stocks climbed, sending the benchmark Standard & Poor’s 500 Index toward an all-time high, after the figures. The S&P 500 advanced 0.4 percent to 1,560.79 at 9:40 a.m. in New York. The gauge is about five points away from its record closing level of 1,565.15 set in October 2007.

Personal Finances

The comfort index’s measure of personal finances climbed to 1.4 last week, the highest reading since July, from minus 0.2 the prior period. The share of Americans with a positive view of their finances climbed to 51 percent, also an eight-month high.

The buying-climate index improved to minus 38.4 from minus 40 the prior week. Thirty-one percent said it was a good time to buy things that they want or need, the most this year.

The Bloomberg gauge assessing Americans’ views on the current state of the economy eased. The gauge fell to minus 57.8 from minus 57.

Attitudes are getting a boost from an improvement in the labor market. Unemployment (USURTOT) fell to 7.7 percent in February, the lowest in four years, from 7.9 percent in January, and the economy added 236,000 jobs, the Labor Department said last week.

Market Rally

Stocks have extended their gains as well. The Dow climbed yesterday for a ninth-straight day, the longest advance since 1996. The gauge has set record closing highs for seven straight days.

The Fed has kept its target interest rate near zero and buying securities at an $85 billion monthly rate in an effort to boost employment and growth.

A housing market rebound may also be helping sentiment and making households more confident about their finances. The S&P/Case-Shiller index of home values in 20 U.S. cities increased 6.8 percent in December from the same month in 2011, the biggest year-to-year gain since July 2006.

The gains in sentiment are translating into more spending. Retail sales climbed 1.1 percent in February, the most in five months, after a 0.2 percent gain in January, Commerce Department figures showed yesterday.

Higher stocks and home values are providing a cushion against increased payroll taxes and more expensive gasoline. The levy that funds Social Security reverted as of January to its 2010 level of 6.2 percent from 4.2 percent. Workers earning $50,000 take home about $83 less a month.

Pump Prices

The price of a gallon of regular gasoline is holding above $3.70 a gallon after reaching a recent low of $3.22 on Dec. 19, according to figures from AAA, the largest U.S. motoring group.

As the economy recovers, New York-based Coach Inc. (COH) Chief Executive Officer Lew Frankfort said there is “resiliency” among American consumers.

“The consumer continues to be cautious,” Frankfort said at a March 12 conference. “Obviously, there are additional taxes being deducted from people’s salaries. The male and female consumer believes that the world is going to be steady.”

Today’s report showed confidence among Americans who earn the least continues on the ascent. The sentiment gauge for households with incomes less than $15,000 a year advanced to the highest level since December 2007.

Sentiment among younger adults, those 18 to 34, and among unmarried Americans also climbed to five-year highs.

Western U.S.

Geographically, the index reached its highest level since May 2009 among those living in the West. Comfort among those without a high school degree rose to a one-year high.

The Bloomberg Consumer Comfort Index, compiled by Langer Research Associates in New York, conducts telephone surveys with a random sample of 1,000 consumers 18 and older. 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 most recent reading is based on the average of responses over the previous four weeks.

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 for the headline reading is 3 percentage points.

If you’d like to receive a copy of the comfort results on a weekly basis, please contact

To contact the reporter on this story: Jeanna Smialek in Washington at jsmialek1@bloomberg.net

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

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Consumer Comfort in U.S. Improves to Highest Level Since April

Jim R. Bounds/Bloomberg

A housing market rebound may also be helping sentiment and making households more confident about their finances.

A housing market rebound may also be helping sentiment and making households more confident about their finances. Photographer: Jim R. Bounds/Bloomberg

1:22

March 14 (Bloomberg) -- The number of Americans filing applications for unemployment benefits unexpectedly dropped by 10,000 to 332,000 in the week ended March 9, the fewest since mid January, according to data today from the Labor Department in Washington. Another Labor Department report showed wholesale prices climbed 0.7 percent in February, reflecting a jump in energy costs that are now dissipating. Betty Liu and Michael McKee report on Bloomberg Television's "In the Loop." (Source: Bloomberg)

5:13

March 13 (Bloomberg) -- Richard Clarida, global strategic adviser at Pacific Investment Management Co., talks about the outlook for the U.S. economy, Federal Reserve monetary policy and negotiations on the fiscal budget. Clarida, speaking with Tom Keene and Sara Eisen on Bloomberg Television's "Surveillance," also talks about Italy's economy and Europe's debt crisis. (Source: Bloomberg)

5:55

March 14 (Bloomberg) -- John Burns, chief executive officer of John Burns Real Estate Consulting, talks about the outlook for the U.S. housing market. He speaks with Tom Keene and Sara Eisen on Bloomberg Television's "Surveillance." Richard Clarida, global strategic adviser at Pacific Investment Management Co., also speaks. (Source: Bloomberg)

4:11

March 14 (Bloomberg) -- Spencer Rascoff, chief executive officer of Zillow Inc., talks about the outlook for the U.S. housing market. He speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)

6:39

March 14 (Bloomberg) -- Gilbert Harrison, founder and chairman of Financo Inc., talks about the outlook for the U.S. retail market and consumer spending. Harrison, speaking with Tom Keene, Scarlet Fu and Sheila Dharmarajan on Bloomberg Television's "Surveillance," also discusses a judge's mediation order in the dispute involving Macy's Inc., J.C. Penney Co. and Martha Stewart Living Omnimedia Inc. over the right to sell some Martha Stewart merchandise. (Source: Bloomberg)