Confidence Among U.S. Consumers Rises to the Highest Level in Five Months
Confidence among U.S. consumers rose in November to the highest level in five months.
The Thomson Reuters/University of Michigan final index of consumer sentiment rose to 64.1 this month, the highest since June, from 60.9 in October. The median estimate of economists surveyed by Bloomberg News called for a reading of 64.5.
Further gains in sentiment, which is still at levels seen during the last recession, may provide ballast for the consumer spending that makes up about 70 percent of the economy. Unemployment hovering around 9 percent and concerns over a possible euro zone default and deficit reduction gridlock in the U.S. are weighing on consumers’ spirits.
“Confidence is still in recession territory, well below normal,” Sal Guatieri, a senior U.S. economist at BMO Capital Markets in Toronto, said before the report. “Confidence hasn’t fully recovered the drop-off from earlier in the summer that stemmed in part from the debt-ceiling fiasco, the downgrade and the escalation of the euro credit crisis.”
Estimates of the 63 economists surveyed by Bloomberg for the confidence measure ranged from 62.5 to 67. The index averaged 89 in the five years leading up to the recession that began in December 2007 and ended in June 2009. It averaged 64.2 during the 18-month recession.
The Michigan survey’s index of current conditions, which reflects Americans’ perceptions of their financial situation and whether they consider it a good time to buy big-ticket items like cars, increased to 77.6 from 75.1 the prior month.
The index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, climbed to a four-month high of 55.4 from 51.8.
Consumers in today’s confidence report said they expect an inflation rate of 3.2 percent over the next 12 months, the same as in the prior survey.
Over the next five years, the range tracked by Federal Reserve policy makers, Americans expect a 2.7 percent rate of inflation, the same as in October.
The Michigan index compares with the Bloomberg Consumer Comfort Index which was minus 50.1 in the week ended Nov. 20, down from minus 50 a week earlier. The measure has been at minus 50 or less for nine of the past 10 weeks, a performance unprecedented in its 26-year history.
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