Consumer Comfort in U.S. Climbed to an Eight-Month High

Consumer sentiment last week reached an eight-month high, reflecting broad-based gains that indicated even wealthy Americans were less concerned about tax increases and fiscal policy challenges heading into 2013.

The Bloomberg Consumer Comfort Index rose to minus 31.8 in the period ended Dec. 30, its highest since April, from minus 32.1 a week earlier. For the year, the index climbed 12.9 points, the biggest annual improvement since 1998. Americans earning $100,000 or more reported their most optimistic reading in more than two years.

“The rebuilding of wealth and modest income gains permitted consumer sentiment to overcome slow growth and a politically divisive environment in late 2012,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. Rising home values and low interest rates in particular are buoying wealthier households, helping to overcome the threat of higher taxes in 2013, he said.

The index finished the year at its best level since mid-April, less than half a point from the 2012 high it reached twice that month. It has held above its traditional trouble zone, the minus 40s, for 15 straight weeks, a positive run last recorded in early 2008.

For the year, the index averaged minus 38.1, the most since 2007. It remains below its long-term average of minus 15.8.

Stocks fell, pulling the Standard & Poor’s 500 Index down from close to a five-year high. The S&P 500 eased 0.2 percent to 1,459.38 at 9:35 a.m. in New York.

Another report today from the ADP Research Institute showed companies added 215,000 workers in December, the most since February, after a 148,000 gain a month earlier that was larger than initially estimated.

Jobless Claims

The Labor Department reported initial jobless claims last week climbed by 10,000 to 372,000. The closing of some state employment agencies during the holidays prompted the government to estimate some figures.

The comfort survey, conducted in the last week of the year when President Barack Obama and Congress remained at odds over taxes and government spending, showed a more positive outlook among Democrats than other voters.

The comfort index was minus 19.8 among registered Democrats, compared with minus 35.8 for Republicans and minus 33.9 for Independents. Democrats have had a rosier outlook than Republicans for a record 41 straight weeks.

The index coincides with improvements in other areas of the economy, including housing. Residential real estate, which triggered the economic downturn that ended in June 2009, is rebounding, with resales at their strongest pace in more than two years and building permits at a four-year high.

Income Groups

Among Americans with annual incomes of $100,000 or more, the Bloomberg index rose to 11.8 from 6.6 a week earlier, capping nine weeks in positive territory. For those making $50,000 or more, the gauge climbed to minus 4.1, the highest reading since January 2008.

That contrasts with the mood of the lowest wage earners. The gauge for those earning less than $15,000 a year was minus 72.5, its worst since early September.

Two of the three components of the Bloomberg consumer comfort index improved last week. The measure of Americans’ views of the state of the economy climbed to minus 57.1, the second-highest level since March 2008, from minus 58.5 the prior week. The personal finances gauge rose to 0.8, the first positive reading since July, from minus 0.5.

The buying climate index decreased to minus 39 from minus 37.5 in the previous period.

Retail Sales

Retailers lured reluctant shoppers with late-December specials after Hurricane Sandy, the presidential election and the school shooting in Newtown, Connecticut, tempered earlier holiday spending.

Macy’s Inc. and Gap Inc. reported December same-store sales that topped analysts’ estimates after shoppers rushed to take advantage of last-minute discounts.

Sales at Macy’s, the second-biggest U.S. department-store company, rose 4.1 percent, exceeding the average projection of 3.7 percent from analysts surveyed by researcher Retail Metrics Inc. Gap, the largest U.S. specialty-apparel retailer, posted a 5 percent gain, topping the 3.6 percent estimate.

The Bloomberg Consumer Comfort Index, compiled by Langer Research Associates in New York, conducts telephone surveys with a random sample of 1,000 consumers 18 and older. Each week, 250 respondents are asked for their views on the economy, personal finances and buying climate. 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. The margin of error for the headline reading is 3 percentage points.