Consumer Comfort in U.S. Climbs to Highest Level in a MonthJeanna Smialek
Consumer confidence in the U.S. climbed last week to the highest level in a month as improving labor and real-estate markets eased the burden of a higher payroll tax.
The Bloomberg Consumer Comfort Index rose to minus 35.9 in the period ended Feb. 10 from minus 36.3 in the prior week. The advance, within the survey’s margin of error of 3 percentage points, was led by waning pessimism about the economy.
More job opportunities pushed the average length of unemployment in January to a two-year low and the recovering housing market has boosted property values, helping shore up sentiment. At the same time, gasoline prices at a four-month high and gridlock in Washington over the budget may prevent confidence from staging a bigger recovery.
“Readings this low show consumers are still not fully convinced that economic recovery is in the tea leaves,” said Richard Yamarone, a senior economist at Bloomberg LP in New York. “Higher payroll taxes are weighing greatly on consumer attitudes.”
Fewer Americans than projected filed applications for unemployment benefits last week, indicating an improving outlook for the labor market, another report showed today. Jobless claims decreased by 27,000 to 341,000 in the week ended Feb. 9, according to Labor Department figures.
Shares fell today on disappointing economic data from overseas. The Standard & Poor’s 500 Index dropped 0.3 percent to 1,516.51 at 9:40 a.m. in New York after reports showed economies in Europe and Japan shrank more than forecast in the fourth quarter.
The Bloomberg gauge assessing Americans’ views on the current state of the economy improved for a third straight week, to minus 61.5 from minus 63.6. Nineteen percent had a positive view, up from 18 percent the past three weeks.
The comfort index’s measure of personal finances held at minus 1.6, the highest level this year. The buying climate index fell to minus 44.6, the weakest reading in more than four months, from minus 43.8 the prior week.
Higher fuel costs may be to blame. The price of a gallon of regular gasoline has climbed about 40 cents since last year’s low of $3.22 reached on Dec. 19, according to date from AAA, the largest U.S. motoring organization.
What’s more, workers are smarting from the increase in the payroll tax, which Congress allowed to return to its 2010 level of 6.2 percent from 4.2 percent. An American who earns $50,000 is taking home about $83 less a month because of the levy.
Improving job prospects may help ease the burden. Employers hired a net 157,000 workers last month following gains of 196,000 and 247,000 in December and November, Labor Department figures show.
The average duration of unemployment fell in January to 35.3 weeks, the lowest since December 2010, from 38.1 weeks a month earlier, according to the data.
Figures yesterday showed the brighter labor picture is helping underpin spending. Retail sales rose 0.1 percent in January after 0.5 percent increases in each of the prior two months, according to the Commerce Department.
Lower borrowing costs may be bolstering purchases of big-ticket items. Auto sales totaled 15.2 million at an annual rate last month after 15.3 million in December, according to data from Ward’s Automotive Group. The January pace compared with a 2012 average of 14.4 million.
Netgear Inc. Chief Executive Officer Patrick C. S. Lo said Feb. 12 that household spending is on the mend.
“We feel pretty confident that the consumers are back in North America,” said Lo, whose San Jose, California-based network equipment maker markets to small businesses and households. “As we have seen in the U.S. in Q4 in particular, the return of retail is pretty significant. We saw the tremendous car sales numbers, as well as, you know, some of the apparel chains.”
Confidence improved last week among income extremes. The Bloomberg survey showed the comfort index for Americans making more than $100,000 a year was positive for a second week, climbing to 3.7 from 2.9. The gauge for households earning $15,000 or less advanced to minus 49.8, the highest since 2007, from minus 52.6.
Among those making $50,000 to $75,000, sentiment fell to the lowest level since June.
A gauge of sentiment among young adults, those between 18 and 34, fell for a fifth straight month, to the lowest level since September.
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.