Consumer optimism hits 8-year high

CONSUMER OPTIMISM on the U.S. economy rose in March to the highest level since 2004 as a decline in claims for unemployment benefits offered more evidence of a labor-market recovery.
Posted 3/22/12

WASHINGTON - The number of Americans saying the U.S. economy is getting better rose in March to the highest level since 2004 as a decline in claims for unemployment benefits offered more evidence of a labor-market recovery.

Thirty-four percent of respondents to Bloomberg’s monthly consumer expectations survey said the economy was improving, the largest share since January 2004. The pickup boosted the monthly expectations the highest in a year. Figures from the Labor Department today showed jobless claims decreased by 5,000 to 348,000 in the week ended March 17, the fewest since February 2008.

The best six months of job growth since 2006 are boosting the optimism of consumers whose spending accounts for 70 percent of the economy. Another report today showed the index of leading indicators rose in February by the most in 11 months, signaling the U.S. expansion will strengthen, helping to sustain global growth as China slows and Europe threatens to sink into a recession.

“The economy will be gradually building up momentum going forward,” said Omair Sharif, an economist at RBS Securities Inc. in Stamford, Connecticut. “We will be shouldering a little bit more of the burden given the slowdown in Europe and some degree of slowing in emerging markets.”

Stocks fell as manufacturing contracted in Europe and China. The Standard & Poor’s 500 Index declined 0.8 percent to 1,391.48 at 11:50 a.m. in New York. The yield on the 10-year Treasury note dropped to 2.27 percent from 2.3 percent late yesterday.

Monthly Expectations

Bloomberg’s monthly expectations gauge climbed to 1 this month from a reading of minus 7 in February. It was at minus 45 as recently as October. The monthly index is based on responses to people who are asked whether the economy is getting better, worse or staying the same.

Americans are growing more optimistic as employment prospects brighten. Mark Eister, 47, of Kennesaw, Georgia, landed a job this month with Georgia Perimeter College as director of military outreach after sending out more than 400 applications since August. He retired from the U.S. Army in December.

“One week, the phone was ringing off the hook with job offers and interviews,” he said. “I feel like the economy is getting better. As I have talked to more employers and hiring managers, they seem ready to talk and bring people on board.”

The weekly Bloomberg Comfort Index, based on a separate survey that asks for current views of the economy, personal finances and whether it’s a good time to buy, was minus 34.9 in the period ended March 18, down from a four-year high of minus 33.7 over the previous seven days.

Unemployed Americans

Confidence among the unemployed rose to minus 44 last week, the strongest since April 2008. Sentiment also climbed among those with a college degree, rising to the highest level since March 2008.

Higher gasoline prices may be limiting gains in the index. The average price of regular gasoline at the pump climbed to a 10-month high of $3.88 a gallon yesterday, according to AAA, the nation’s largest auto club. It’s climbed 60 cents this year.

“We’re beginning to see positive signs that the economy is improving,” Randy Potts, chairman and chief executive officer of Winnebago Industries Inc., said during a March 15 conference call. “Consumer confidence has been trending higher, and the jobless rate is improving. Both the stock market and housing markets are showing signs of improvement, but rising fuel prices do remain a concern.”

Dismissals have been waning, and reports show companies are becoming more willing to expand workforces amid evidence sales are improving. Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.

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