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Consumer Comfort in U.S. Held Last Week Near Four-Year High

Consumer Comfort in U.S. Held Last Week Near Four-Year High
A shopper puts a shirt in a bag in a Hennes & Mauritz AB (H&M) store at the City Creek Center in Salt Lake City, Utah. Photographer: George Frey/Bloomberg

Consumer confidence held last week near a four-year high as more Americans said their finances were in better shape.

The Bloomberg Consumer Comfort Index was minus 32.8 in the period ended April 8, second only to the prior week’s minus 31.4 as the highest since March 2008. Households were the most optimistic about their financial resources since April 2008.

Employment gains and rising incomes may be making it possible for households to pay down debt and at the same time maintain spending, which accounts for about 70 percent of the economy. Signs that gasoline prices are stabilizing, albeit at the highest level in almost a year, may also be stoking optimism that the worst of the jump in fuel prices is over.

“A weaker-than-expected March jobs report, a string of declines in global equity markets and the gathering of dark economic clouds again over Europe likely blunted the recent improvement in consumer sentiment,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. At the same time, he said, “consumer sentiment appears likely to avoid the mid-year swoon that characterized the past two years, save an exogenous shock to the economy.”

Another report from the Labor Department showed initial jobless claims rose by 13,000 to 380,000 in the week ended April 7, the highest since Jan. 28 and a sign the pace of improvement in the labor market may be slowing. The median forecast in a Bloomberg survey called for 355,000 claims.

Stocks rose for a second day as signs that the Federal Reserve and Bank of Japan will stimulate growth overshadowed the jump in claims. The Standard & Poor’s 500 Index climbed 0.2 percent to 1,371.29 at 9:35 a.m. in New York.

Views on Economy

While the personal finances gauge rose, the index of whether consumers consider it a good time to buy fell to minus 37.3 from minus 33.9, today’s report showed. The third component of the index -- the state of the economy -- fell to minus 66 from minus 63.6.

Other gauges of consumers’ outlooks have exhibited strength. The Thomson Reuters/University of Michigan’s final index of consumer sentiment rose last month to the highest level since February 2011.

Payrolls grew by 120,000 in March, half the gain in the previous month and the smallest since October, Labor Department data showed last week. The unemployment rate fell to a three-year low of 8.2 percent as more people left the labor force.

Registered Democrats were the most confident since August 2007, as their optimism index rose to minus 22.4. That of Republicans fell to minus 39.4, the lowest in two months, pushing the gap between the two major political parties to the highest since record-keeping began in 1990. Sentiment among independents decreased to minus 31.2 from a four-year high of minus 29.1 the previous week.

Election Year

“With partisanship in full force, Democrats may be filtering their assessments through the prism of supporting the incumbent president, Republicans the opposite,” Gary Langer, president of Langer Research Associates LLC in New York, which compiles the index for Bloomberg, said in a statement. He said similar patterns emerged when incumbents were running, with Republicans gaining at the expense of Democrats in 2004 as George W. Bush was seeking re-election and vice versa in 1996 with Bill Clinton.

The average price of regular gasoline at the pump has retreated recently from a 10-month high of $3.94 a gallon, according to AAA, the nation’s largest motoring club. The cost eased to $3.91 yesterday.

“You can see consumer confidence is rising,” Mark Fields, president of the Americas at Ford Motor Co., said on an April 4 conference call with analysts. “The labor market is gaining momentum.”

Survey Details

The Bloomberg Consumer Comfort Index 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.

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.

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