Confidence Improves as Americans Grow More Upbeat About Economy
Consumer sentiment improved for a third straight week as Americans were more upbeat about the economy than at any time in the past six months.
The Bloomberg Consumer Comfort Index (COMFCOMF) climbed to a seven-week high of minus 28.6 in the period ended Feb. 23 from minus 30.6. A gauge of how respondents view the economy was the strongest since August, while measures of household finances and the buying climate also picked up.
Stock prices hovering close to a record and higher property values are helping brighten attitudes about household finances and the economy. Further improvement in sentiment that translates into faster demand would set the stage for employers, who have been slowing the pace of dismissals, to boost headcount even more.
“Greater job stability has resulted in a more solid financial footing for U.S. households and has bolstered consumer comfort,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.
Other reports today showed more Americans than forecast filed for jobless benefits last week and orders for durable goods dropped less than forecast in January.
Jobless claims increased by 14,000 to a one-month high of 348,000 in the week ended Feb. 22, according to the Labor Department in Washington. Bookings for goods meant to last at least three years decreased 1 percent after a revised 5.3 percent slump in December that was larger than previously reported, the Commerce Department said. Orders for non-military capital goods excluding aircraft, a proxy for future business investment, improved.
Stocks were little changed after the figures. The Standard & Poor’s 500 Index fell less than 0.1 percent to 1,844.29 at 9:35 a.m. in New York.
The Bloomberg index gauging views of current economic conditions improved to minus 51.9 last week from minus 53.2 the prior period, today’s report showed.
The measure of consumers’ personal finances rose to 5, the highest reading since Dec. 22, from 3.9 the prior week. The index gauging whether it’s a good time to buy improved to a five-week high of minus 39 from minus 42.6.
Further strength in housing revolves less around movements in interest rates than it does on Americans’ attitudes about the economy and labor market, according to Larry Sorsby, chief financial officer at homebuilder Hovnanian Enterprises Inc.
“I think it’s really more about what’s going on in the U.S. economy,” Sorsby said during a Feb. 25 presentation. “Consumer confidence, job growth is really what we need to kind of really spur housing activity again.”
Sales of new U.S. homes unexpectedly climbed in January to the highest level since July 2008, figures from the Commerce Department showed yesterday in Washington.
The S&P/Case-Shiller index of property values in 20 U.S. cities rose 13.4 percent in December from the same month in 2012 after increasing 13.7 percent in the year ended in November, the group said this week in New York. The S&P 500 (SPX) climbed 30 percent last year, the biggest annual gain since 1997.
As equities and home prices pick up, the highest-earning Americans who probably hold such assets are more optimistic than other income groups. Confidence among those making more than $100,000 rose last week to a four-week high of 12.6.
Those making less than $15,000 were also more upbeat, with a gauge of confidence climbing to the highest level of the year. Discussion in Washington about raising the minimum wage may be helping drive optimism.
President Barack Obama on Feb. 22 urged Congress to boost the federal minimum to $10.10, which would help lift some 900,000 Americans out of poverty, based on a Congressional Budget Office analysis. A vote on legislation that would boost the floor was delayed in the Senate this week.
Today’s report also showed Republicans gained confidence last week, while Democrats were less upbeat, narrowing the gap in sentiment between the two parties to the lowest level in more than a month.
Full-time workers were at their most confident since August, while sentiment among widowers and divorcees was the strongest since October 2007.
Other measures of consumer sentiment have been mixed in February. The Conference Board’s index fell by 1.3 points this month to 78.1. While the Thomson Reuters/University of Michigan preliminary gauge held at 81.2 as a measure of the economic outlook rose to a six-month high, the group said Feb. 14.
Margin of Error
The Bloomberg Consumer Comfort Index 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.
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