Michigan Consumer Sentiment Index Rose More Than Forecast

Consumer Comfort in U.S. Increased Last Week
Customers browse Apple Inc. iPad2 tablet computers at a store in San Francisco. Photographer: David Paul Morris/Bloomberg

Confidence among U.S. consumers rose more than forecast in December, to a six-month high, as Americans began wrapping up their holiday spending.

The Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 69.9 from 64.1 at the end of November. The median estimate in a Bloomberg News survey called for 68 after a preliminary reading of 67.7. The gauge averaged 89 in the five years leading up to the recession that began in December 2007 and ended in June 2009.

A drop in unemployment and lower gasoline prices may be boosting confidence, raising the odds that the pickup in household spending will continue into 2012. Still, gridlock over deficit-cutting measures in Congress and taxes may limit further gains in sentiment.

“Income growth and a reviving job market are helping restore confidence,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “Recent decline in jobless claims and gasoline prices are a positive.”

Estimates for sentiment in the Bloomberg survey ranged from 64 to 70. The index averaged 64.2 during the 18-month recession.

The labor market is showing more signs of improving. First-time claims for jobless benefits unexpectedly declined last week, falling by 4,000 to 364,000, the lowest since April 2008, the Labor Department reported today.

The index of U.S. leading indicators climbed more than forecast in November, a sign the world’s biggest economy will keep growing in early 2012.

Leading Indicators

The Conference Board’s gauge of the outlook for the next three to six months rose 0.5 percent after a 0.9 percent October increase, the New York-based research group said today. The median forecast of 54 economists surveyed by Bloomberg projected the gauge would advance 0.3 percent.

The Standard & Poor’s 500 Index held earlier gains after the reports, rising 0.5 percent to 1,249.49 at 10:09 a.m. in New York.

The Michigan index compares with the Bloomberg Consumer Comfort Index, which climbed to minus 45 in the period ended Dec. 18 from a reading of minus 49.9 the prior week, marking the biggest seven-day gain since January. The monthly expectations gauge climbed to minus 17 for December, a seven-month high.

The Michigan survey’s index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, rose to 63.6 this month from 55.4 in November. It marked the fourth straight gain and the biggest point increase since May.

Current Conditions

The index of current conditions, which reflects Americans’ perceptions of their financial situation and whether they consider it a good time to buy big-ticket items like cars, increased to 79.6, the highest since June, from 77.6 the prior month.

Consumers in today’s confidence report said they expect an inflation rate of 3.1 percent over the next 12 months, down from 3.2 percent in November.

Over the next five years, the range tracked by Federal Reserve policy makers, Americans expect a 2.7 percent rate of inflation, the same as the prior two months.

A gallon of regular unleaded gasoline fell to $3.20 on Dec. 20, the lowest since February, according to AAA, the nation’s largest automobile association. The unemployment rate in November fell to 8.6 percent, the lowest in more than two years, while the S&P 500 gained 7.3 percent from Nov. 25 through yesterday.

Early holiday season sales, which traditionally begin the day after Thanksgiving, provided a mixed picture. Limited Brands Inc. and Macy’s Inc. posted November same-store sales that topped analysts’ estimates as Thanksgiving weekend deals drew record crowds, while stores that missed out on the shopping blitz trailed expectations.

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