March 7 (Bloomberg) -- Confidence among U.S. consumers rose for a fifth week, reaching the highest level this year as improving stock and home prices gave households a lift.
The Bloomberg Consumer Comfort Index improved to minus 32.4 in the week ended March 3 from minus 32.8 in the prior period. The share of Americans with a positive view of the U.S. economy held at its highest level since early 2008 and more people said it was a good time to buy needed goods and services.
The Dow Jones Industrial Average rallied to an all-time high this week and residential real-estate values in 2012 climbed by the most in six years, giving a boost to household wealth that may help sustain spending. An improving job market will also be critical to supporting confidence as the highest gasoline prices in four months and a bigger payroll tax hurt disposable income.
“The rise in equity prices continues to bolster consumer confidence despite a number of economic headwinds,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “The risk going forward is the lagged impact on confidence and spending due to tax hikes, which will disproportionately burden lower-income groups.”
Another report today showed the number of Americans who filed for unemployment benefits declined to a six-week low, pointing to further improvement in the labor market.
First-time jobless claims unexpectedly fell by 7,000 to 340,000 in the week ended March 2, the lowest since mid January, according to data from the Labor Department in Washington. The median forecast of 50 economists surveyed by Bloomberg called for an increase to 355,000. The four-week average dropped to a five-year low.
A Labor Department report tomorrow will show employment climbed by another 163,000 workers in February, according to the median forecast of economists surveyed by Bloomberg. Figures from the Roseland, New Jersey-based ADP Research Institute yesterday pointed to a 198,000 gain in private employment, which excludes government agencies.
Stocks rose on the improving employment picture. The Standard & Poor’s 500 Index climbed 0.1 percent to 1,543.56 at 9:40 a.m. in New York. The Dow closed yesterday at a record 14,296.2.
The Bloomberg gauge assessing Americans’ views on the current state of the economy was little changed at minus 57 after rising to minus 56.9 in the prior period, which was its highest level since March 2008. Twenty-two percent had a positive view of the economy, matching readings last week and in November that were highest since March 2008.
The buying-climate index improved to minus 40, the highest this year, from minus 41.3 the prior week. Thirty percent said it was a good time to buy things that they want or need, the highest level since December.
The comfort index’s measure of personal finances was little changed at minus 0.2 compared with minus 0.1 in the prior period.
Improved attitudes on the economy may reflect a rebound in the housing market. A pickup in demand is driving prices higher, and the S&P/Case-Shiller index of property values in 20 U.S. cities increased 6.8 percent in December from the same month in 2011, the biggest year-to-year gain since July 2006.
Job prospects may also be brightening consumers’ moods. Employers hired a net 157,000 workers last month following revised gains of 196,000 and 247,000 in December and November that were bigger than initially estimated, Labor Department figures show.
Even as improvements in the labor market help consumers, the payroll tax that funds Social Security reverted to its 2010 level of 6.2 percent from 4.2 percent as of January. An American who earns $50,000 is taking home about $83 less a month as a result.
Higher fuel costs may also be thwarting bigger gains in spending. The price of a gallon of regular gasoline has climbed above $3.70 a gallon after hitting a low of $3.22 on Dec. 19, according to figures from AAA, the largest U.S. motoring group.
As consumers pocket less disposable income, they could decrease their spending on products like Anheuser-Busch InBev NV’s beers, which include the Budweiser and Stella Artois brands.
“We do expect U.S. volumes to be impacted in the first quarter due to short-term pressure on consumer disposable income from higher payroll taxes, delayed tax refunds, and gas prices,” Carlos Alves de Brito, chief executive officer of the world’s biggest brewer, said in a Feb. 27 conference call.
“What we’re saying is that we’ll see some softness in the first quarter.”
Still, today’s report showed confidence among Americans who earn the least is at its highest in about five years. The sentiment gauge for households with incomes less than $15,000 improved to minus 41.6, the highest level since December 2007, from minus 46.9 in the prior period.
The measure for households who earn more than $100,000 slipped to 1.6 from 2.4. It has held above zero for five straight weeks.
Single Americans are more positive about the economy than they’ve been in almost five years after a seven-point gain this week, and confidence among young adults remains near last week’s seven-month high.
Women’s comfort is at its highest level in 11 months.
Geographically, the index climbed to its highest level since May 2009 among Americans in the West.
The Bloomberg Consumer Comfort Index, compiled by Langer Research Associates in New York, conducts telephone surveys with a random sample of 1,000 consumers 18 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.
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