Confidence among American consumers jumped more than forecast in September as a budding housing recovery and rising stock prices gave households reason to be more upbeat.
The Conference Board’s sentiment index increased to 70.3, the highest level in seven months, from 61.3 in August, figures from the New York-based private research group showed today. The reading exceeded the most optimistic projection of economists surveyed by Bloomberg. Another report showed home values rose by the most in two years.
Consumers felt better about their chances of landing a job soon and about the employment outlook over the next six months, today’s report showed, easing one of the impediments to the spending that accounts for 70 percent of the economy. The boost in confidence also comes just over a month before Americans go to the polls, giving President Barack Obama’s re-election prospects a lift.
“The consumer is hanging in there,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. “It’s one of the reasons we’re not totally pessimistic about the economy. Spending is growing, but we need more things to contribute.”
Stocks fell on concern global stimulus measures will not be enough to boost growth. The Standard & Poor’s 500 Index dropped 1.1 percent to 1,441.59 at the close in New York, a fourth consecutive decline. Treasury securities climbed, sending the yield on the benchmark 10-year note down to 1.67 percent from 1.71 percent late yesterday.
Globally, sentiment hasn’t held up as well. French industrial confidence held this month near its lowest in more than two years as the economy stagnates and tax increases loom, figures from the national statistics office Insee showed today in Paris.
In Australia, households are building a financial cushion by repaying mortgages faster and saving more, while businesses are indicating renewed willingness to borrow, the nation’s central bank said.
Estimates for the Conference Board’s U.S. consumer sentiment gauge ranged from 60 to 70 in the Bloomberg survey of 73 economists.
Amelia Guckenberg, 27, an attorney in Richmond, Virginia, is among those Americans sensing the economy is getting better and, as a result, is more comfortable spending.
“I know that the jobs numbers are increasing, not dramatically, but incrementally things are getting better,” she said. “I am definitely pretty conservative when it comes to personal spending, but I am a little more confident now. I feel less worried about spending on myself, taking shopping trips, buying clothing, stuff like that.”
Apple Inc. sold more than 5 million iPhone 5s in the first three days it was available, surpassing a record set last year by the previous model, the Cupertino, California-based company said yesterday. The demand fell short of some analysts’ estimates as the company said supply constraints delayed shipments.
Apple is “working hard to get an iPhone 5 into the hands of every customer who wants one as quickly as possible,” Chief Executive Officer Tim Cook said in the statement.
The Conference Board’s measure of present conditions increased to a five-month high of 50.2 from 46.5 in August. The measure of expectations for the next six months advanced to 83.7, the highest since February, from 71.1.
The percent of respondents expecting more jobs to become available in the next six months climbed to the highest since February, while the share of those who expect their incomes to rise over the same period rose to the highest level of the year.
Stabilization in housing is probably playing a role in the improvement in confidence. Home prices in July rose 1.2 percent from a year earlier, the biggest 12-month increase since August 2010, according to S&P/Case-Shiller data released today in New York. Property values in July were up 0.4 percent from the previous month. The Federal Housing Finance Agency’s purchase-only home-price index, also released today, showed a 0.2 percent gain in July after 0.6 percent increases the prior two months.
“We’re finally seeing a more sustained and broad-based improvement in home prices,” said Millan Mulraine, senior U.S. strategist for TD Securities in New York, who correctly projected the year-over-year increase. “The housing sector has made an important turn here, and that is being sustained.”
Also brightening household moods, the S&P 500 has gained 16 percent this year through yesterday.
Today’s confidence report parallels strength in other indicators. The Bloomberg Consumer Comfort Index climbed to a seven-week high in the period ended Sept. 16. The Thomson Reuters/University of Michigan preliminary sentiment index rose this month to the highest level since May.
Improving consumer moods may bolster President Obama, a Democrat, in a campaign that has been largely fought on economic issues.
A survey by the Pew Research Center conducted Sept. 12-16 showed Obama with a 51 percent to 43 percent lead over Republican Mitt Romney among likely voters, a bigger September gap than the last three candidates who went on to win in November. The survey of 2,192 likely voters has a margin of error of plus or minus 2.4 percentage points.
Results of a Gallup poll issued today showed the gain in confidence is tied to political affiliations. Democrats’ views on the economy shot up 10 points in the week ended Sept. 23, while that for Republicans dropped five points, according to Gallup. For independents, a key swing group, sentiment fell four points last week.
Unemployment, which has exceeded 8 percent for 43 straight months, the longest stretch in records dating back to 1948, remains a concern. That’s why Federal Reserve policy makers this month pledged to continue to buy assets and pump money into the economy until the jobless rate drops.
“The economy is still pretty sluggish with unemployment where it is and with consumer confidence where it is,” Tom Folliard, president and chief executive officer of CarMax Inc., a Richmond, Virginia-based used-vehicle retailer, said during a Sept. 20 earnings call. “I still think we have that kind of the economy hanging over our customer traffic.”