Consumer Comfort in U.S. Rises to Highest Level Since SeptemberShobhana Chandra
Consumer confidence rose last week to the highest level since September, recovering the ground lost as a result of the partial federal shutdown and a sign the economy is regaining momentum.
The Bloomberg Consumer Comfort Index climbed to minus 29.4 in the week ended Dec. 15, the fourth straight gain, from the prior period’s minus 30.9. The December expectations gauge advanced to a three-month high.
Falling unemployment, along with increasing home values and stock prices that are underpinning wealth, will probably keep encouraging more Americans. The progress will help sustain consumer spending, benefiting retailers during the rest of the holiday-shopping season.
“Three months of steady improvement in hiring and rising equity prices throughout 2013 have bolstered consumer sentiment and confidence in the direction of the economy,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.
The comfort index last week was the highest since the period ended Sept. 29. It slumped to a one-year low of minus 37.9 in early November after lawmakers’ inability to agree on a budget prompted some government agencies to close for 16 days beginning on Oct. 1.
A bipartisan deal made its way through Congress this week that will ease the next round of spending cuts known as sequestration. The bill cleared the Senate yesterday and was sent to President Barack Obama, marking the first bipartisan budget produced by a divided Congress in 27 years.
The Bloomberg economic expectations index for December rose to minus 11 from minus 14 the prior month. It had dropped to an almost two-year low of minus 31 in October as the fiscal gridlock in Washington unnerved households.
Another report today show claims for jobless benefits unexpectedly rose last week, reflecting the typical volatility seen during the year-end holidays. The number of applications for unemployment insurance payments climbed by 10,000 to 379,000, the most since the end of March.
All three components of the weekly Bloomberg comfort index -- finances, views of the economy, and whether it’s a good time to shop -- advanced last week, today’s report showed.
The gauge assessing Americans’ views on the current state of the economy showed the biggest increase, climbing to a three-month high of minus 56.9 from minus 60.1 the prior week. The measure of consumers’ views on their personal finances rose to 4.2 from 3.
The buying-climate index advanced to minus 35.5, the highest since early October, from minus 35.6.
The report also showed homeowners and full-time workers were the most upbeat in two months.
The recovery in the housing market is driving up property values. The S&P/Case-Shiller national home-price gauge rose 11.2 percent in the third quarter from the same period in 2012, the biggest year-over-year advance since the first three months of 2006, the latest available data showed. Its index of property prices in 20 cities climbed 13.3 percent in September from a year earlier.
The job market continues to make progress. Payrolls expanded by 203,000 workers in November after a 200,000 gain in October, and the jobless rate fell to a five-year low of 7 percent, according to Labor Department figures.
Equity prices also are boosting Americans’ wealth. The Standard & Poor’s 500 Index has surged 27 percent so far this year. The gauge climbed 1.7 percent to a record yesterday after the Federal Reserve said it will begin reducing stimulus and raised its assessment of the job market.
The improvement in household finances is supporting spending. Americans flocked to stores and auto dealerships in November as retail sales climbed 0.7 percent, the most in five months, the Commerce Department reported on Dec. 12.
Car purchases are firming. Industry figures showed auto sales climbed to a 16.3 million annualized rate in November, the highest since May 2007, according to data from Ward’s Automotive Group.
Rising demand is spurring automakers to expand. General Motors Co. brought out 18 new or revamped models in the U.S. this year and plans 14 more next year as the Detroit-based company improves its lineup from one of the industry’s oldest into one the newest. Ford Motor Co. plans to introduce 16 new vehicles in North America next year.
Fed officials yesterday decided to trim monthly bond purchases to $75 billion from $85 billion starting in January, taking the first step toward unwinding the unprecedented stimulus that Chairman Ben S. Bernanke put in place to help the economy recover from the worst recession since the 1930s. Policy makers also said the target for the benchmark interest rate will probably remain near zero “well past” the time the jobless rate reaches 6.5 percent.
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 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.