Consumer Comfort in U.S. Rises for Second Consecutive Week

Consumer Comfort in U.S. Rises for Second Consecutive Week
The lowest jobless rate since 2009 and rising stock values are combining to take some of the sting out of gasoline prices, which have climbed to the highest level in more than two years. Photographer: Andrew Harrer/Bloomberg

Consumer confidence in the U.S. rose for a second consecutive week as an improving job market helped ease the burden of higher fuel costs.

The Bloomberg Consumer Comfort Index climbed to minus 44.5 in the period ended April 3 from minus 46.9 the prior week. A measure of Americans’ views of their own finances increased to the second-highest level since January 2010, while a gauge of perceptions of the economy advanced from a two-year low.

The lowest jobless rate since 2009 and rising stock values are combining to take some of the sting out of gasoline prices, which have climbed to the highest level in more than two years. At the same time, the threat remains that companies will pass mounting raw-material costs along to customers, which may hurt household spending on other goods and services.

“This is a forward-looking signal of an improving labor market,” John Herrmann, a senior fixed-income strategist at State Street Global Markets in Boston. “The pickup in jobs and ongoing improvement in the equity market is bolstering confidence.”

Another report today showed fewer Americans filed first-time claims for unemployment insurance last week, indicating the labor-market recovery is being sustained. Applications for jobless benefits fell 10,000 in the week ended April 2 to 382,000, the fewest since Feb. 26, according to the Labor Department.

Interest-Rate Worriers

Stocks fell after another earthquake shook Japan and growing concern over the possible shutdown of the federal government. The Standard & Poor’s 500 Index decreased 0.2 percent to 1,333.51 at the 4 p.m. close in New York. Treasury securities were little changed.

The Bloomberg Comfort Index, with records dating back to December 1985, has moved up from an eight-month low of minus 48.9 reached in the period ended March 20. Readings averaged minus 45.7 last year.

The gauge remains “deeply distressed” even as it’s “off the floor,” said Gary Langer, president of Langer Research Associates LLC in New York, which compiles the index for Bloomberg.

The measure of personal finances rose to minus 0.9 from minus 1.1, the report showed. Fifty percent of those polled held positive views on their financial situation, the same as the previous week, and 3 points better than the average this year.

Buying Climate

The buying-climate index increased to minus 50 from minus 53.1. Those saying it was a good time to buy needed items rose to 25 percent from 23 percent.

Consumers’ views on the economy turned less negative, rising to minus 82.5 last week from minus 86.5. The share of households with a positive view of the economy increased to 9 percent, while 91 percent viewed the economy as “poor” or “not so good.”

“Given the frequency with which most Americans pull over to fill the tank, consumer confidence customarily falls when gas prices rise,” Langer said in a statement. “Like dueling fighters, an improving employment picture is duking it out with rising gasoline prices for the hearts of American consumers -- with the better news winning the last two rounds.”

Americans with full-time jobs as well as people who were unemployed turned more optimistic last week. The confidence among those working a complete day climbed for the first time since the end of February.

Job Market

The jobless rate fell to 8.8 percent last month from 8.9 percent in February and private employers hired 230,000 workers, capping the strongest two-month gain since 2006, the Labor Department reported April 1.

Rising stock prices are also boosting confidence. The Dow Jones Industrial Average has climbed 7.3 percent this year through yesterday.

The gains may be helping shore up sentiment among those better off. Confidence among people making more than $100,000 a year, those most likely to own equities, rose for the first time in a month.

At the same time, falling home values may be keeping sentiment depressed. Residential real estate prices dropped in the 12 months ended January by the most in more than a year. The S&P/Case-Shiller index of property values in 20 cities fell 3.1 percent from January 2010, the group said March 29.

Raising Prices

Higher costs for fuel and other commodities are prompting some manufacturers to raise prices. The average cost of regular gasoline at the pump was $3.71 a gallon on April 5, the highest since September 2008, according to AAA, the nation’s biggest motoring organization.

Ford Motor Co., the second-largest U.S. automaker, this week raised prices by $117, or 0.4 percent, per vehicle because of higher costs for raw materials such as steel.

“We’re responding to higher commodity prices, and this is in keeping with what we’re seeing from our competitors,” said Todd Nissen, a company spokesman.

The Bloomberg Comfort Index fell to a record low of minus 54 in November 2008, during the height of the financial panic, while the peak of 38 was reached in January 2000.

The measure 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 most recent reading is based on the average of responses over the previous four weeks.

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

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