WASHINGTON - Americans’ views of the economic outlook improved in March to the highest level this year as stock prices rallied to a record high.
The gap between positive and negative expectations narrowed to minus 4 this month from minus 7 in February, according to results of the Bloomberg Consumer Comfort Index. The weekly measure fell for the first time in seven weeks, to minus 33.9 from minus 31.6.
Gains in the stock market and stable home prices may be making consumers feel wealthier, giving them the wherewithal to boost the spending that makes up about 70 percent of the economy. At the same time, further improvement in sentiment will be tested by higher payroll taxes and concerns government budget cuts may hold back the economic expansion.
“Americans are growing more confident about their own financial and economic situations,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “A quicker pace of employment growth, a modest wealth effect, and what looks to be a decline in gasoline prices has likely bolstered future expectations on the economy.”
Another report today showed fewer Americans than forecast filed applications for unemployment benefits last week. First-time jobless claims rose by 2,000 to 336,000 in the week ended March 16, according to data today from the Labor Department in Washington, D.C. Economists projected an increase to 340,000. The monthly average dropped to the lowest level since February 2008.
Stocks fell, after the Standard & Poor’s 500 Index approached a record high yesterday, as German manufacturing unexpectedly contracted and Cyprus’s president worked on a new plan to obtain a European bailout. The S&P 500 dropped 0.5 percent to 1,551.5 at 9:36 a.m. in New York.
The S&P 500 has surged 130 percent from a 12-year low in 2009 as the economy rebounded from its worst recession in the post-World War II era. Better-than-estimated corporate earnings and the Federal Reserve’s record monetary stimulus have combined to spur the stock market. The benchmark S&P 500 rose to within two points of its 2007 record last week while the Dow Jones Industrial Average reached an all-time high.