Consumer Confidence in U.S. Increases to Almost Two-Month High

Confidence among U.S. consumers rose last week to the highest level since early October as tensions in Washington calmed and hiring improved.

The Bloomberg Consumer Comfort Index increased to minus 33.7 in the period ended Nov. 24, the strongest in seven weeks, from minus 34.6. Households became less pessimistic about the state of their finances and the economy as the government’s partial shutdown last month receded from memories. The reading was the best for any pre-Thanksgiving week since 2007.

Rising equity and home prices are bolstering household wealth and contributing to a pickup in attitudes just before the holiday-shopping season. The pace of wage and job growth will also influence whether consumers boost their spending, which accounts for almost 70 percent of the U.S. economy.

“Confidence among upper-income households has definitely been bolstered by the appreciation in equity markets,” said Joseph Brusuelas, a senior economist for Bloomberg LP in New York. “The risk to sentiment going forward” may be the recent rebound in gasoline prices that would shake the wherewithal of poorer Americans especially, said Brusuelas.

Other figures today showed fewer Americans than expected filed jobless claims last week and orders for big-ticket items declined in October.

Applications for unemployment benefits decreased by 10,000 to 316,000 in the week ended Nov. 23, the fewest in two months, the Labor Department said in Washington. The median forecast in a Bloomberg survey called for an increase to 330,000 claims.

Durable Orders

Bookings for goods meant to last at least three years fell 2 percent last month after a 4.1 percent gain in September, Commerce Department data showed. Excluding transportation equipment, where demand is often volatile month to month, orders dropped 0.1 percent after a 0.2 percent gain.

Stocks rose, with equities heading for a third straight monthly gain, as investors weighed the drop in jobless claims to assess the strength of the economy. The Standard & Poor’s 500 Index increased 0.1 percent to 1,804.78 at 9:32 a.m. in New York.

Two of the Bloomberg weekly gauge’s three components improved last week. The gauge of personal finances advanced to 0.1, the first positive reading in almost two months, from minus 2.1 the week prior. A measure of Americans’ views of current economic conditions increased to minus 62.5 from minus 63.7 the previous period.

The buying-climate index slipped to minus 38.7 from minus 38.2 as fewer Americans responded that now is a good time to make purchases. The decline may have stemmed from a resurgence in fuel costs, weighing on household budgets. A gallon of regular gasoline climbed to $3.29 on Nov. 25, the highest in a month, according to AAA, the largest U.S. motoring group.

Labor Market

At the same time, improvements in the labor market are helping underpin confidence. The number of job openings in September rose to a more than five-year high, according to Labor Department figures released last week. Payroll gains have averaged 186,300 a month so far this year, up from 182,750 in 2012.

Rising home prices are also propping up balance sheets for some Americans, leaving them with greater means to spend. The S&P/Case-Shiller index of property values in 20 U.S. cities gained 13.3 percent in September from a year earlier, the most since 2006, a report showed this week. Prices nationwide jumped 11.2 percent in the third quarter compared with the same period in 2012, the report said.

Today’s comfort figures showed attitudes diverged further between homeowners and renters. The confidence reading for home-owners rose to minus 23.6 from minus 26.6, compared with minus 48.8 among renters.

Regional Differences

Sentiment is the highest for men since the middle of October, having moved up to minus 28 from minus 31.6 the previous week, and black respondents are the most upbeat since early September. The reading among Northeasterners was the lowest since March at minus 41.9, even as Westerners and Midwesterners reported confidence gains.

The Bloomberg Consumer Comfort Index, compiled by Langer Research Associates in New York, 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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