Consumer confidence rose last week to its highest level since August as Americans were more upbeat about being able to provide for their families than at any time in six years.
The Bloomberg Consumer Comfort Index (COMFCOMF) climbed to minus 25.4 in the period ended April 20, the second-strongest level since January 2008, from minus 29.1 the prior week. Households’ views of their finances jumped for a second week while gauges of the economy and buying climate also improved.
Stock-market gains are bolstering sentiment among wealthier Americans while an improving labor market boosts prospects for a broader swath of earners. Further wage gains may be needed to strengthen household budgets and keep a floor under confidence as the world’s largest economy regains its footing.
“Rising equity prices, which are sitting near all-time highs, and a slower pace of firings in the economy are bolstering consumer confidence across just about all income and demographic groups,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. Optimism among the highest earners is “critical for growth prospects in the current quarter and beyond,” since those Americans are responsible for an outsized share of consumer spending, he said.
Stocks advanced, pushing the Standard & Poor’s 500 Index to near a record, as earnings from Apple Inc. to Facebook Inc. and Caterpillar Inc. topped estimates. The S&P 500 climbed 0.4 percent to 1,882.53 at 9:35 a.m. in New York.
The comfort survey showed an increase in the personal finances index to 8, the highest level since April 2008, from 2.7. A gauge of whether it a good time to buy needed goods and services climbed to minus 34.4, the strongest since the first week of this year, from minus 37.3.
The measure of consumers’ views on the state of the economy rose to minus 49.9 from minus 52.9.
The Commerce Department today said durable goods orders increased 2.6 percent last month, the most since November. Demand excluding transportation equipment climbed the most in more than a year.
Another report today showed more Americans than forecast filed applications for unemployment benefits last week as the Easter holiday period made it difficult to adjust the data for seasonal variations. Jobless claims increased 24,000 in the period ended April 19 to 329,000, the Labor Department reported.
More muted firings are helping buoy spirits, while a faster pace of hiring and stronger income gains may be needed to prompt a further rise in sentiment. Payrolls climbed by 192,000 workers in March after a 197,000 increase the previous month that was larger than first estimated, the Labor Department said earlier this month. Private payrolls, which exclude those at government agencies, exceeded the pre-recession peak for the first time.
Wage gains have been slower to materialize. Average hourly earnings increased 2.1 percent in March from a year earlier, close to the 2 percent average since the last recession ended in June 2009.
Companies such as Martinsville, Virginia-based Hooker Furniture Corp. (HOFT) are upbeat about economic prospects as sales pick up.
“After a slow December and January and some weather-related impact in February, we are beginning to see retail conditions improve,” Chief Executive Officer Paul Toms said on an April 16 earnings call. “The overall economy seems to be more resilient and able to shake off bad news, there’s a firmer foundation under key indicators for our industry like housing, employment, the stock market and consumer confidence.”
Climbing gasoline prices threaten to keep a lid on consumer spending gains. The average price of a gallon of regular gasoline was $3.67 as of April 22, the most expensive since July, according to AAA, the nation’s largest motoring organization. They’ve risen 10 percent since the start of 2014.
While sentiment improved among lower- and upper-income households, those earning more than $100,000 a year were among those showing the strongest increase, today’s survey data showed. Their sentiment rose to 24.7, the highest since November 2007, from 16.1 in the prior week.
Sentiment among men last week rose to minus 13.2, its best level since January 2008, from minus 19.2. The gauge of women rose to minus 37 from minus 38.4. Men have remained more upbeat than women since August 2012.
Confidence picked up in the West and in the South, which showed a 9.9-point jump that was the biggest since March 2008. Fewer respondents in the Northeast and Midwest expressed optimism than in last week’s report.
The Bloomberg Consumer Comfort Index, compiled by Langer Research Associates in New York, conducts telephone surveys with a random sample of 1,000 consumers ages 18 and older. Each week, 250 respondents are asked for their views on the U.S. economy, personal finances and buying climate. The margin of error for the headline figures is plus or minus 3 percentage points.
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.
To contact the reporter on this story: Michelle Jamrisko in Washington at firstname.lastname@example.org