Six years into the U.S. economic expansion, the recession in American consumer confidence is finally over.
The Bloomberg Consumer Comfort Index increased to 43.1 in the period ended Dec. 21, its highest level since October 2007, two months before the worst economic slump in the post-World War II era began, according to a report. The same week, the fewest people since early November lined up at state employment agencies to apply for jobless benefits, other figures showed.
The confidence index blew past its long-term average as a strengthening job market, hints of impending wage gains and the cheapest gasoline in five years help Americans shake off any lingering recessionary blues. The gauge’s eight-point jump over the past three months has been led by improving attitudes toward the economy and buying climate, signaling a retail sales surge will probably extend beyond the holidays.
“It looks like consumers are in high gear heading into next year,” said Sean Incremona, senior economist at 4Cast Inc. in New York. “Better labor market conditions, better support for personal income, gas prices – we’re really seeing good momentum.”
Fewer Americans than forecast filed applications for unemployment benefits last week, Wednesday’s Labor Department figures showed. Jobless claims declined by 9,000 to a seven-week low of 280,000 in the period ended Dec. 20.
Households held the most optimistic views about the economy since October 2007, the report showed. The world’s largest economy expanded at a 5 percent annualized rate in the three months ended in September as consumer spending accelerated, Commerce Department figures showed yesterday.
“We have a very optimistic outlook for this fiscal year and beyond,” Paul Toms, chief executive officer of Martinsville, Va.-based Hooker Furniture Corp., said in a Dec. 10 earnings call. “It’s hard to find many negatives. As housing steadily improves, consumer confidence is on an upward trajectory and the stock market is experiencing all-time highs.”
Retailers’ registers were busier this year during the weekend before Christmas than last. Purchases during the so-called Super Saturday weekend rose to $42 billion, up from $41 billion in the same period last year, said Craig Johnson, president of Customer Growth Partners, a research firm in New Canaan, Conn. U.S. stocks were little changed as indexes erased gains in the final minutes of trading, after a five-day rally in equities that sent the Dow Jones industrial average above 18,000 for the first time. The Standard & Poor’s 500 Index fell less than 0.1 percent to 2,081.88 at the close in New York. Equity markets closed at 1 p.m. for Christmas Eve, and will be shut tomorrow for Christmas.
The Bloomberg measure of whether it’s a good time to spend showed its best reading since April 2007, and the gauge of personal finances also increased.
Every major income group showed an increase in comfort last week, with those making at least $100,000 registering the most optimistic reading in more than seven years as stocks gained. The S&P 500 has advanced almost 13 percent this year.
Falling prices at service stations are generating more disposable income for households. The average cost of a gallon of regular gasoline was $2.35 yesterday, the lowest since May 2009, according to motoring group AAA.
“Simply put, Americans feel richer,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Consumers are more upbeat because of the 2.7 million new payroll jobs out there in 2014, near-record numbers of job openings, a giddy stock market with double-digit gains.”
Along with fewer job cuts, payroll gains are on pace for their best year since 1999, averaging almost 241,000 this year through November. The Labor Department will release December figures Jan. 9.