Consumer confidence last week held near its 2014 high as views on the U.S. economy were the second-strongest since 2008.
The Bloomberg Consumer Comfort Index stood at 37.1 in the period ended June 22, unchanged after three weeks of gains and just shy of the 37.9 reading in late April that marked the year’s high point. Perceptions of the broader economy improved for the fifth consecutive time.
While Americans are being heartened by gains in employment and equities, enthusiasm is being tempered by elevated prices at the gasoline pump and grocery stores that are straining budgets. A report today showed consumer spending grew less than forecast in May as households used gains in income to shore up household finances.
“Confidence remained unchanged as consumers await the evolution of gasoline and food prices,” two factors that “weigh heavily” on spending, said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.
Consumer purchases, which account for about 70 percent of the economy, climbed 0.2 percent in May after being little changed the prior month, Commerce Department figures showed today. Incomes advanced 0.4 percent and the saving rate increased to an eight-month high.
Another report today showed claims for jobless benefits dropped by 2,000 last week to 312,000, signaling steady progress in the job market, according to figures from the Labor Department.
Stocks fell after the spending data fell short of expectations. The Standard & Poor’s 500 Index declined 0.2 percent to 1,954.9 at 9:40 a.m. in New York.
The comfort gauge is a composite of ratings on the economy, personal finances and buying climate. The sub-index for the current state of the economy rose to 27.4 from 27 the prior week, according to Langer Research Associates LLC in New York, which tabulates the data for Bloomberg. It was the best reading since 27.5 in early August, a more than five-year high.
The metric for personal finances fell one point to 51.1, while the outlook on the buying climate gained 0.7 point to 32.7, its best in seven weeks.
Americans’ spirits are rising as the job market strengthens. Employers added 217,000 workers to payrolls in May, lifting the average monthly advance so far this year to 213,600, the most for a year’s average since 1999.
An improving housing market is also providing support to company’s such as Lowe’s Cos., the second-largest home-improvement retailer. Sales of new and previously owned homes rose in May, reports showed earlier this week.
“The macro economy is constructive for growth in our industry for 2014,” Robert F. Hull, chief financial officer of Mooresville, North Carolina-based Lowe’s, said in a June 24 conference. “Customers are telling us they feel better about the opportunity to invest in their home going forward. So, we feel pretty good about where we are from a housing perspective. And from an overall macro perspective, we continue to add jobs on a monthly basis, that’s picking up steam. So, as we think about the drivers of our business, both housing and income is constructive.”
The data have yet to catch up with perceptions. The world’s largest economy shrank at a 2.9 percent annualized rate in the first quarter, the worst performance in five years, revised figures from the Commerce Department showed yesterday.
Nonetheless, economists remain upbeat. Gross domestic product will expand at a 3.5 percent rate in the second quarter and average 3.1 percent in last half of the year, according to the median projection economists surveyed by Bloomberg from June 6 to June 11.
Today’s comfort figures showed confidence for part-time workers last week was the strongest in two years, while full-timers had their second-best levels in nearly a year. Sentiment amongst those without a job dropped to its lowest in more than four months.
Black Americans reported their best confidence since August, exceeding the figure for whites for the first time in six weeks. Historically, blacks’ confidence runs an average 11.8 points below whites’.
The index for single people climbed to a 10-month high, while Midwesterners expressed their highest confidence since October, gaining 2.7 points. Americans earning between $25,000 and $39,000 also advanced, moving closer to those with higher salaries.
Since May, the Bloomberg Comfort Index has been presented on a scale of zero to 100 rather than the previous minus 100 to 100, with the midpoint shifting to 50 from zero. The change is also reflected in the gauge’s components. It doesn’t affect the measures’ relationship to each other or their correlation with other economic indicators. Historical data have been revised and analysis of trends, values and other variables also have not been affected.