Consumer Comfort Rises on Increased Optimism About U.S. EconomyDanielle Trubow
Consumer sentiment improved last week as Americans were more optimistic about the economy than at any time in almost seven years.
The Bloomberg Consumer Comfort Index climbed to 37.7 in the period ended Oct. 19, matching the second-highest level since August 2013, from 36.2. A gauge of attitudes about the world’s largest economy was the strongest since January 2008.
Better job prospects and the cheapest gasoline prices since early 2011 are combining to undergird households’ spirits at the same time the stock market shows signs of stabilizing. Bigger wage gains would help propel sentiment further and lay the groundwork for more spending after sales cooled last month.
Fewer jobless claims and lower fuel costs are “brightening consumer views,” Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg, said in a statement. Still, “the recovery has lacked sustained momentum, held back by the stagnant wages and continued weakness in retail sales.’
Another report showed claims for unemployment benefits over the past month fell to the lowest level in 14 years. The four-week average of jobless claims, a less-volatile measure than the weekly figure, dropped to 281,000, the lowest since May 2000, from 284,000 the week before, the Labor Department said. The reading for the week ended Oct. 18 climbed by 17,000 to 283,000, in line with the median forecast of 52 economists surveyed by Bloomberg.
Stocks rose amid better-than-forecast corporate earnings and data signaling stronger economies from China to Europe. The Standard & Poor’s 500 Index advanced 1.1 percent to 1,947.31 at 9:36 a.m. in New York.
The Bloomberg measure about the state of the economy advanced for a third straight week, rising to 28 from 25.7.
The gauge of personal finances increased to 52.4 from 50 a week earlier, while the buying-climate measure, which asks whether this is a good time to make purchases, was little changed at 32.7 compared with 33 the prior period.
Lower prices at the gas pump and limited inflation for other goods and services are helping increase purchasing power at a time when wages are slow to pick up.
The cost of living barely rose in September, restrained by decelerating prices for a broad range of goods and services, a report from the Labor Department showed yesterday. The nationwide average for a gallon of gasoline was $3.09 on Oct. 21, down 61 cents from a high this year in April, according to AAA, the largest U.S. auto group.
Today’s report showed confidence among those earning less than $50,000 increased by the most since November. Sentiment fell among those earning more than $100,000 after rising for five weeks to the highest since April.
Earlier this week, Ethan Allen Interiors Inc., the furniture store known for catering to high-end consumers, reported net sales in its first quarter increased 5 percent from a year earlier.
“The consumer is cautious but somewhat optimistic,” Farooq Kathwari, chief executive officer of the Danbury, Connecticut-based company, said in an Oct. 16 interview on Bloomberg TV. “Consumers, if you average out, they’re under pressure. But if you take the top one-third or so, they’re doing well.”
Today’s report showed sentiment among those who attended college was the highest since December 2007, while comfort among those without a high school diploma climbed the most since April. Confidence among women increased to a four-month high.
Among regions, Americans living in the Northeast were the most upbeat since August 2007. The gauge of sentiment in the Midwest also climbed to a pre-recession high.
The Bloomberg Comfort Index has been presented on a scale of zero to 100 since May, rather than the previous minus 100 to 100, with the midpoint shifting to 50 from zero. The change is also reflected in the gauge’s components. It doesn’t affect the measures’ relationship to each other or their correlation with other economic indicators. Historical data has been revised and analysis of trends, values and other variables also aren’t affected.