Americans’ Views of Economy Climb to Highest Since Early 2008Danielle Trubow
Americans’ views of the economy climbed last week to the highest level in almost seven years as the labor market strengthened and gasoline prices kept falling.
A Bloomberg measure of perceptions about the world’s largest economy increased to 28.9 in the period ended Nov. 9, the highest since January 2008, from 27.4. The weekly Consumer Comfort Index, which also accounts for views of the buying-climate and personal finances, was little changed at 38.2.
The cheapest gas since the end of 2010, more employment opportunities and record equity prices are helping bolster households’ perceptions. At the same time, limited wage growth is reining optimism about finances and whether it’s a good time to buy as the holiday-shopping season gets under way.
“Wages have barely moved,” Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg, said in a statement. Still, with gas prices “the lowest in nearly four years, the added spending power may help further lift consumers’ moods heading into the holiday season.”
Another report today showed firings remain muted, holding near the lowest levels in more than a decade. The number of claims for jobless benefits rose to 290,000 last week from 278,000 over the previous period, according to figures from the Labor Department. The four-week average, which strips out some of the volatility in the weekly data, rose to 285,000 from 279,000, which matched the lowest reading since April 2000.
Stocks hovered near records as investors assessed corporate deals and earnings from retailers including Wal-Mart Stores Inc. The Standard & Poor’s 500 Index rose 0.2 percent to 2,042.96 at 9:40 a.m. in New York.
The consumer comfort index last week was the second-highest since January 2008, and followed a 38.1 reading the period before. The figure is holding above this year’s average of 36, and 34.3 in 2013.
The buying-climate measure, which asks whether this is a good time to make purchases, declined to 31.9 last week from 32.7, while the gauge of personal finances was little changed at 53.9 compared with 54.1 the prior period, a two-month high.
Lower prices at the pump are boosting Americans’ purchasing power at a time when wages are slow to pick up. The nationwide average for a gallon of gasoline was $2.92 on Nov. 12, down 78 cents from a high this year in April and the lowest since December 2010, according to AAA, the largest U.S. auto group.
The drop continues to resonate at the lower end of the income scale. Today’s report showed confidence among those earning less than $50,000 a year increased to the highest level since August 2013.
Firming sentiment may explain why Clorox Co., the second-largest household cleaning-products company in the U.S., is a little more upbeat about the consumer even as limited wage gains remain a headwind. Average hourly earnings rose 2 percent in the 12 months ended in October, according to the Labor Department. The year-over-year gains match the average since the last recession ended in June 2009.
“The consumer in this country is becoming a little less cautious,” Donald R. Knauss, chief executive officer of the Oakland, California-based company, said on an Oct. 31 earnings call. “Now having said that, we still have one-third of the households in this country making less than $35,000 a year.”
For those with investments in equities, sentiment is stronger, today’s data showed. Confidence among Americans 65 and older, many of whom have retirement accounts and have built up nest eggs, is the highest since September 2007 as stocks trade near all-time highs.
Today’s report also showed married couples were more optimistic than at any time in almost seven years, while confidence among those living in the South was the highest since May. Sentiment among political independents rose last week, which included the midterm elections, to the highest in nearly seven years. 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.