March 8 (Bloomberg) -- Household confidence improved last week to a four-year high as more Americans said the economy was improving and decided it was a good time to shop.
The Bloomberg Consumer Comfort Index was minus 36.7 in the period ended March 4, the highest since April 2008, up from minus 38.8 in the prior period. The gauge on the state of the economy reached a one-year high, while the buying-climate measure climbed to a level last exceeded in December 2009.
For a fifth straight week, half of those surveyed also rated their personal finances as positive, bolstered by a resilient stock market, faster job growth and rising wages. Stronger household balance sheets may be helping ease the sting of the steepest gasoline prices in almost a year.
“Consumers are much more comfortable about their own personal financial situations, which is largely negating the recent rise in gasoline prices,” said Joe Brusuelas, a senior economist at Bloomberg LP in New York. “That said, consumer confidence remains at the low end of the historical range.”
Since its inception in December 1985, the comfort index has averaged minus 15.2.
Another report today showed claims for unemployment insurance rose to a level that’s consistent with an improving job market. The number of applications for jobless benefits increased by 8,000 to 362,000 last week, the Labor Department said. The monthly average held close to a four-year low.
Household wealth climbed from October through December for the first time in three quarters on higher equity values. Net worth for households and non-profit groups increased by $1.19 trillion, or 2.1 percent from the previous three months, to $58.5 trillion, the Federal Reserve said today in its flow of funds report from Washington. Housing wealth decreased by the most in more than a year.
Stocks gained for a second day. The Standard & Poor’s 500 Index climbed 0.9 percent to 1,364.66 at 2:10 p.m. in New York. The measure has increased 7.6 percent this year through yesterday.
All three components of the Bloomberg consumer comfort index improved. The gauge of personal finances was 0.3, its third positive reading in four weeks, after minus 0.5 a week earlier.
An index of the buying climate climbed to minus 40.4 from minus 43.4 the previous week. Some 30 percent said it was a “good” time to spend, the most since December 2009.
View of Economy
The measure of Americans’ views on the state of the economy improved to minus 70, the best reading since February 2011, from minus 72.4.
Homeowners, women, and people living in the South were among the groups that registered their highest levels of confidence since 2008.
Sentiment among black Americans climbed to the highest level since December 2007, exceeding the reading for whites by the most since records began in 1990.
The comfort gauge reached its highest level in a year among Republicans, at minus 26.8, compared with minus 41.8 for Democrats. Among independents, a key swing group during this year’s election, the comfort gauge improved to minus 36.6, marking a fifth week above minus 40, a first since July 2008.
Nonetheless, rising fuel costs pose a risk. The price of a gallon of regular unleaded gasoline climbed to $3.77 as of March 4, the highest level since June 2011, according to AAA, the nation’s largest automobile association. In May last year, the cost of the fuel rose to $3.99 a gallon from $3.10 at the end of January, causing confidence to slump.
“As gas pushes toward $4, the risk of consumer backlash grows ever greater,” Gary Langer, president of Langer Research Associates LLC in New York, which compiles the index for Bloomberg, said in a statement. “Even with its breakout this year, consumer sentiment has far to run.”
Better job growth may be one reason the run up in energy prices has yet to derail sentiment. The economy generated 210,000 jobs in February, marking a third straight month of job gains higher than 200,000, economists surveyed by Bloomberg forecast the Labor Department will report tomorrow.
Pandora Media Inc. is among those hiring. The Oakland, California-based Internet radio pioneer is adding advertising sales representatives to boost its presence in the market, Joe Kennedy, chief executive officer, said on a conference call March 7.
“We’ve already hired dozens of people for that,” he said. “That process will continue.”
Auto dealers may be among retailers benefiting from the improvement in employment. Sales of cars and light trucks rose 6.4 percent in February from the prior month to reach a 15 million annual pace, the highest reading since February 2008, according to figures from Ward’s Automotive Group.
Purchases at General Motors Co., Chrysler Group LLC and Ford Motor Co. beat the median forecast of analysts surveyed.
The Bloomberg Consumer Comfort Index is based on responses to telephone interviews with a random sample of 1,000 consumers 18 years old 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.
Field work for the index is done by SSRS/Social Science Research Solutions in Media, Pennsylvania.
To contact the reporters on this story: Bob Willis in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Christopher Wellisz at email@example.com