Growing faith in economy keeps confidence at 5-year high
GROWING FAITH IN THE U.S. economy kept consumer confidence at a five-year high last week as Americans had the least pessimistic view of the economy since 2008.
BLOOMBERG FILE PHOTO/VICTOR J. BLUE
By Jeanna Smialek Bloomberg News
WASHINGTON - Consumer confidence last week was unchanged near a five-year high as Americans had the least pessimistic views on the economy since 2008.
The Bloomberg Consumer Comfort Index held at minus 29.7 in the period ended June 2. Sentiment about the current state of the economy improved to the best level since January 2008, and opinions on personal finances were at a one-year high.
Rebounds in housing and stocks have helped upper-income Americans recover much of the wealth lost during the recession, while a drop in firings is probably making the average worker feel more secure in their jobs. At the same time, wage gains that have barely kept up with inflation and a jump in interest rates may be starting to suppress buying plans, raising concern about the outlook for spending.
“People are more certain about their own employment and wage prospects,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “The rising equity and home prices are certainly having an interesting effect on upper-income Americans, who seem to have captured a portion of the recovery in overall national wealth.”
Sentiment for households earning between $75,000 and $100,000 annually reached a five-year high, eclipsing confidence among the highest income earners.
Fewer Americans filed applications for unemployment benefits last week, indicating companies are confident demand will be sustained in the face of federal budget cuts and tax increases, other figures showed today.
Jobless claims decreased by 11,000 to 346,000 in the week ended June 1 from 357,000, the Labor Department reported. The total number of people receiving benefits declined to 2.95 million. It reached a five-year low of 2.92 million two weeks ago.
Stocks rose as investors consider whether the Federal Reserve will begin scaling back stimulus. The Standard & Poor’s 500 Index climbed 0.1 percent to 1,609.98 at 9:54 a.m. in New York.
Two of the comfort index’s components improved last week. The gauge on consumers’ current view about the economy climbed to minus 53 from minus 54.7, while the measure of personal finances rose to 4.6, its best reading since April 2012, from 2.8.
Fewer consumers said the time was right to purchase needed items, as a measure of the buying climate fell to minus 40.8, a two-month low, from minus 37.3 a week earlier. The measure reached a more than five-year high of minus 31.5 four weeks ago.
During that time, mortgage rates have skyrocketed amid concern Federal Reserve policy makers will scale back on the amount of bonds they buy each month. The rate on a 30-year fixed home loan shot up to 3.81 percent in the week ended May 30, the highest level in a year, from 3.35 percent in the week ended May 2, according to figures from Freddie Mac. It reached a record- low 3.31 percent in late November.
Other reports on buyer sentiment have followed the comfort index in showing improvement. The Conference Board’s confidence index rose in May to the highest level since February 2008, while the Thomson Reuters/University of Michigan sentiment gauge reached its highest level since July 2007.
A housing market rebound could be brightening moods. The S&P/Case-Shiller index of property values in 20 cities increased 10.9 percent in the year to March, the biggest 12-month gain since April 2006, a report showed last month.