Confidence among U.S. consumers climbed to a five-week high as an improving labor market helped bolster attitudes of unemployed Americans and those at the lower end of the income scale.
The Bloomberg Consumer Comfort Index rose to 37.3 in the week ended Aug. 24 from 36.6 in the prior period. Views of household finances advanced to an almost four-month high and a gauge of whether it’s a good time to shop also increased.
Payroll gains on pace for the best year since 1999 are helping bolster confidence across income levels and among jobless Americans, whose claims for unemployment benefits are lingering near a more than eight-year low. Cheaper prices at the gas pump and limited inflation are providing some comfort for households whose paychecks have been slow to increase.
“Items like personal incomes and the employment rate are critical,” said Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg. “We’ve seen progress in these and therefore we’re seeing progress in consumer sentiment.”
Other reports today showed the economy expanded more than previously projected in the second quarter and applications for unemployment benefits were little changed last week.
Gross domestic product climbed at a 4.2 percent pace from April through June after shrinking 2.1 percent in the first quarter, the Commerce Department said. The pickup was led by the biggest gain in business investment in more than two years.
Jobless claims declined by 1,000 to 298,000 in the period ended Aug. 23, according to the Labor Department. The four-week moving average dropped to 299,750, hovering near its lowest level since February 2006.
Stocks fell as concern over the Ukraine crisis overshadowed the improving economic data. The Standard & Poor’s 500 Index dropped 0.4 percent to 1,991.41 at 9:35 a.m. in New York.
The Bloomberg gauge of personal finances increased to 53.3 last week, the highest since the period ended May 4, from 51.5 in the previous survey. The measure of whether it’s a good time to buy climbed to a three-week high of 32.5 from 31.8.
Sentiment about the state of the economy eased last week to 25.9 from 26.4 in the prior period.
An index of confidence among those making less than $15,000 a year rose to 24.6, its highest level in a year, from 23.7. That helped narrow the gap between the lowest and highest earners to the smallest since June 2013.
The outlook among jobless Americans also brightened, with the gauge rising to 31.7, the strongest since the week ended May 11, from 29 in the previous week.
Alongside the recent improvement in jobless claims, employers have added an average 230,000 to payrolls a month so far this year, the strongest pace since 1999. Economists project an average of 220,000 through year-end, according to the median in a Bloomberg survey conducted Aug. 8-13. The Labor Department will release August figures on Sept. 5.
More optimism among the jobless and low-income earners could reflect “increased opportunity in the job markets reaching down” as well as prospects for wage gains and the impact of lower inflation, including gasoline prices, Langer said.
The average price of a gallon of regular gasoline was $3.43 as of Aug. 26, matching the lowest level in more than six months, according to AAA, the nation’s largest auto group.
Confidence climbed in three of four U.S. regions last week, led by the highest readings in seven weeks in both the Midwest and Northeast. Comfort in the West dropped to a two-month low.
Among those who are married, sentiment reached the highest level since January 2008, a month after the start of the last recession.
The index still has some ground to make up since its decline from pre-recession levels. The comfort gauge has averaged 35.7 so far this year compared with 44.8 in 2007. The economic slump began in December 2007 and ended in June 2009.
The Bloomberg Comfort Index has been presented on a scale of zero to 100 since May, 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 has been revised and analysis of trends, values and other variables also aren’t affected.