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.
“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.