Consumer Comfort in U.S. Advances to Second-Highest Since 2008Danielle Trubow
Consumer sentiment in the U.S. advanced last week to the second-highest level since 2008 as Americans grew more confident about their financial well-being.
The Bloomberg Consumer Comfort Index climbed to 38.1 in the period ended Nov. 2, just short of the five-year high of 38.3 reached in August 2013. It rose almost 1 point from the prior week. The report’s personal finances gauge was the strongest since mid-September.
The cost to fill up a car’s fuel tank is less now than at any time in the past four years, giving consumers some extra spending money as the holiday-shopping season approaches. Fatter paychecks that coincide with progress in the labor market would make it even easier for households to boost purchases.
“The broad base of the CCI’s recent advance is a positive sign for further gains,” Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg, said in a statement.
Other figures today showed fewer Americans than forecast filed applications for unemployment benefits last week. First-time jobless claims dropped 10,000 to a three-week low of 278,000 in the week ended Nov. 1, the Labor Department reported today in Washington. The median forecast in a Bloomberg survey of economists called for 285,000.
Stocks were little changed, after the Standard & Poor’s 500 Index closed at a record yesterday, as investors scrutinized comments by European Central Bank President Mario Draghi. The S&P 500 fell less than 0.1 percent to 2,023.46 at 9:42 a.m. in New York.
Today’s report on sentiment showed the gauge of personal finances rose to 54.1 from 52.2, while the buying-climate measure, which asks whether this is a good time to make purchases, increased to 32.7 from 31.6 the prior period.
While the Bloomberg measure about the state of the economy eased to 27.4 from 27.9, it remained close to a reading of 28 in mid-October that was the highest since January 2008.
Cheaper gasoline is bolstering sentiment and freeing up money for Americans to spend elsewhere. The nationwide average for a gallon of regular gasoline was $2.96 on Nov. 4, down 74 cents from the April peak and the lowest since the end of 2010, according to AAA, the largest U.S. auto group.
More employment opportunities are also brightening spirits. Payroll gains this year have averaged 227,000 a month through September. Sustaining such a pace through December would make 2014 the best year for hiring since 1999.
The drop in fuel costs and progress in the labor market help explain why MGM Resorts International, the owner of the largest owner of casinos on the Las Vegas Strip, is encouraged.
“People in general are feeling better with not only job security, the low interest rate environment, declining gas prices and we’re seeing that reflected in visitation and convention business,” James Joseph Murren, chairman and chief executive of MGM, said on an Oct. 30 earnings call.
Recent gains in the stock market are also probably having a greater effect on upper-income earners. Today’s report showed confidence among those making more than $50,000 annually was the strongest in a year.
Confidence last week among women, homeowners and consumers 65 years and older was the highest in seven years.
The figures also showed improved sentiment last week among Republicans and political independents leading up to the Nov. 4 midterm elections. Republicans captured control of the Senate from Democrats for the first time in eight years and solidified their majority in the House.
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.