BLBG: Most Americans in Decade Project Economy Will Get Better
More Americans this month said the world’s largest economy will improve than at any time in the past decade, led by a surge among Democrats following the re- election of President Barack Obama.
The share of households projecting the economy will get better rose to 37 percent in November, the highest since March 2002. That propelled the Bloomberg monthly consumer expectations gauge to 4 from minus 7 in October. The weekly Bloomberg Consumer Comfort Index was at minus 33.9 in the period ended Nov. 18, hovering near a seven-month high of minus 33.1 the prior week.
“While the improvement in expectations is largely a function of the election, rising equity prices, an improving labor market and a growing sense the tide has finally turned in the housing market are contributing to the turn in overall sentiment,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.
Growing confidence may lead to a pickup in spending, which makes up about 70 percent of the economy, boosting sales at department stores such as Kohl’s Corp. at the start of the year- end holiday shopping season.
In a separate report today, fewer Americans filed applications last week as damage to the labor market caused by superstorm Sandy began to subside. Jobless claims decreased by 41,000 to 410,000 in the week ended Nov. 17, the Labor Department reported today in Washington.
Stocks were little changed, following a three-day advance in the Standard & Poor’s 500 Index, after the figures and as European finance ministers failed to agree on a debt-reduction package for Greece. The S&P 500 rose 0.1 percent to 1,389.32 at 9:35 a.m. in New York.
Consumer Expectations
The Bloomberg consumer expectations gauge in November showed the first positive reading since March and the highest since February 2011.
Two of the three components of the weekly comfort index fell. The measure on perceptions of the current state of the economy declined to minus 58.9 from a four-year high of minus 56.6 the prior week. The buying climate index fell to minus 38.6 from minus 37.6.
The barometer measuring Americans’ views of their personal finances rose to minus 4.2 from minus 5.1 the previous week.
“Here in the U.S., I have seen some signs of modest economic recovery and improving consumer confidence,” William Johnson, chief executive officer of Pittsburgh-based H.J. Heinz Co., the world’s biggest ketchup maker, said on a Nov. 20 earnings conference call. “I don’t expect robust economic growth in the U.S. in 2013, but I am encouraged by the progress in our U.S. business.”
Housing Data
A budding housing recovery may be helping to shore up household wealth. New-home construction climbed to a four-year high in October, the Commerce Department said yesterday. Sales of existing homes were stronger than forecast last month and an index of homebuilder sentiment rose in November to a six-year high.
Cheaper gasoline may also be contributing to the rise in sentiment. The average nationwide cost for regular gasoline dropped to $3.41 a gallon on Nov. 19, the lowest since July, according to data from AAA, the largest U.S. auto group. The price at the pump reached a 2012 high of $3.94 on April 4.
Gains in the labor market are also boosting Americans’ moods. The economy added 171,000 jobs in October, exceeding the 157,000 average so far this year, according to the latest data from the Labor Department.
Registered Democrats showed the biggest jump in expectations this month, with 63 percent indicating the economy will improve, up 12 percentage points from October. Among independents, 26 percent had a positive response, while 15 percent of Republicans answered affirmatively, both little changed from October.
‘Largely Political’
“The gain is largely political in nature, occurring very disproportionately among Democrats,” said Gary Langer, president of Langer Research Associates in New York, which compiles the index for Bloomberg. “Gains in views the economy is improving, to be truly persuasive, will need to be more broadly based.”
Today’s weekly data showed confidence among Americans in the Midwest and homeowners reached the highest level since April. Sentiment among those earning more than $100,000 was positive for a third straight week.
The Bloomberg Consumer Comfort Index, compiled by Langer Research Associates in New York, conducts telephone surveys with a random sample of 1,000 consumers 18 and older. Each week, 250 respondents are asked for their views on the economy, personal finances and buying climate; the percentage of negative responses is subtracted from the share of positive views and divided by three. The most recent reading is based on the average of responses over the previous four weeks.
The comfort index can range from 100, indicating every participant in the survey had a positive response to all three components, to minus 100, signaling all views were negative. The margin of error for the headline reading is 3 percentage points.
To contact the reporter on this story: Elizabeth Dexheimer in New York at edexheimer@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
