Consumer confidence climbed to a more than seven-year high in November as Americans’ views of their financial well-being improved heading into the holiday shopping season.
The Thomson Reuters/University of Michigan final index of sentiment increased to 88.8, the highest since July 2007, from 86.9 in October. The median projection in a Bloomberg survey of 60 economists called for the index to rise to 90.
Stronger job growth, cheaper fuel and stock prices near all-time highs are boosting household spirits as the busiest time of the year for retailers commences. Bigger wage gains would give an extra lift to consumers and probably sustain spending, which accounts for almost 70 percent of the economy.
“Consumers are increasingly upbeat,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report. “The extreme drop in gasoline prices at the pump which acts as a tax cut is putting more dollars in consumers’ pockets.”
Estimates in the Bloomberg survey for the sentiment measure ranged from 88.5 to 91.5. The preliminary November reading released Nov. 14 was 89.4. The index averaged 89 in the five years before December 2007, when the last recession began, and 64.2 in the 18-month contraction that followed.
A government report earlier today showed consumer spending climbed in October at the same pace as incomes, showing households are staying within their means. Expenditures increased 0.2 percent last month after being little changed in September, while incomes also rose 0.2 percent, Commerce Department figures showed today in Washington.
The Michigan sentiment survey’s index of expectations six months from now gained to 79.9 in November from 79.6 last month.
The gauge of current conditions, which measures Americans’ views of their personal finances, increased to 102.7 in November from 98.3.
Other recent measures of consumer sentiment have given mixed signals.
The Bloomberg Consumer Comfort Index advanced to 40.7 for the period ended Nov. 23 from 38.5, according to a report today. All three components improved last week, with the gauge of views on whether it’s a good time to shop rising to a seven-year high.
The Conference Board’s confidence index released yesterday unexpectedly declined in November to the lowest level in five months as Americans became less upbeat about the economy and labor market.