The share of consumers expecting the economy to worsen fell in February to an almost two-year low as Americans looked beyond harsh winter weather.
Thirty percent, the fewest since May 2012, said the economy was headed in the wrong direction, data from the Bloomberg Consumer Comfort Index showed today. The gap between positive and negative expectations was minus 3, an eight-month high. The weekly measure was little changed at minus 30.6 for the period ended Feb. 16 from minus 30.7.
Snowstorms and colder temperatures in the eastern U.S. last week that shuttered government offices, stalled highway traffic and canceled flights did little to dismay Americans about the economic outlook. More job and income growth would go further in helping bolster the economy after the weather-related slowdown at the start of the year.
“The deep freeze in sentiment is slowly melting as the economy mends due to steady job growth and a reduced pace of firings,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “This is in contrast with the polar vortex that has blanketed much of the nation and economic activity in early 2014.”
The share of respondents holding downbeat expectations on the economy this month declined from 33 percent in January. Forty-two percent projected little change, compared with 39 percent in January, while 27 percent said the expansion is getting better, down from 28 percent.
The gap between negative and positive responses has narrowed each month since reaching an almost two-year low of minus 31 in October, when lawmakers’ failure to agree on a budget resulted in a 16-day partial federal shutdown.
Other reports today showed fewer Americans filed claims for unemployment benefits last week, the cost of living rose at a slower pace in January and a manufacturing gauge jumped this month.
Stocks rose as the data in the U.S. helped offset concern about global growth after a factory gauge in China declined. The Standard & Poor’s 500 Index increased 0.1 percent to 1,829.92 at 9:40 a.m. in New York. The index has almost erased losses from a 3.6 percent January slump.
The weekly comfort index showed the gauge of Americans’ views on current economic conditions improved to minus 53.2 last week, the strongest reading since September, from minus 54.5 the prior period. The measure of consumers’ personal finances rose to 3.9, the highest this year, from 3 the prior week.
By contrast, the index of whether it’s a good time to shop worsened to minus 42.6, the lowest reading in a year, from minus 40.7. Higher heating bills caused by falling temperatures probably contributed to the decline as households had less to spend on other goods and services.
Rising demand for energy has also made it costlier for American drivers. The average price of a gallon of regular gasoline was $3.38 as of Feb. 18, the highest since Oct. 2, according to AAA, the nation’s largest motoring organization.
Inclement weather so far this year has played a role in slowing hiring, sales and construction, prompting economists to cut estimates for first-quarter growth.
Payrolls rose a less-than-forecast 113,000 in January after a 75,000 increase a month earlier, Labor Department figures showed earlier this month.
At the same time, job gains averaged 193,500 a month in 2013, the best year since 2005. Economists are projecting monthly employment increases of about 194,000 in 2014, according to the median in a Bloomberg survey this month.
Easing budget tensions in Washington are providing a bit more clarity for companies such as Bethesda, Maryland-based Host Hotels & Resorts Inc. President Barack Obama signed a debt-limit measure after lawmakers last week approved a plan to avoid the kind of wrangling that led to the October government shutdown.
“It feels like a lot of the basic fundamentals of the economy are better this year,” W. Edward Walter, chief executive officer of the real estate trust that owns luxury hotel properties, said on a Feb. 19 earnings call. “A lot of the disruption that we felt in 2013 -- whether it was the sequester or the shutdown -- it would certainly appear at this point we’re not going to see that recur in 2014.”
Today’s report showed Democrats were more upbeat last week than their Republican counterparts for the 17th straight time. The index among Democrats rose to its highest level since August, while Republicans and political independents were more pessimistic.
Optimism among part-time employees rose to minus 29.1, the best reading since the start of August, from minus 36.9 the prior week. Sentiment worsened among full-time workers and the unemployed.
The Bloomberg Consumer Comfort Index, compiled by Langer Research Associates in New York, conducts telephone surveys with a random sample of 1,000 consumers ages 18 and older. Each week, 250 respondents are asked for their views on the U.S. economy, personal finances and buying climate. The margin of error for the headline figure is 3 percentage points.
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.