Confidence among U.S. consumers jumped more than forecast in February as American’s adjusted to a higher payroll tax and signs of a recovering housing market spurred faith in the future.
The Conference Board’s index climbed to 69.6, exceeding all forecasts in a Bloomberg survey of economists, from a revised 58.4 in January, data from the New York-based private research group showed today. It was the first improvement in four months and the biggest since November 2011.
The gain in sentiment from the lowest level in more than a year signals Americans are beginning to cope with the a two percentage-point increase in the payroll tax used to fund Social Security and higher gasoline prices that are curbing disposable income. Rising home values and gains in employment may be brightening attitudes, helping to underpin spending.
“The job market is healing, we’re creating enough jobs to at least keep the unemployment rate stable,” Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania, said before the report. “House prices are rising, and that’s helping to improve confidence.” Economists at Moody’s Analytics are the most accurate consumer-confidence forecasters in the two years through January, according to Bloomberg calculations.
The median forecast of 76 economists surveyed by Bloomberg projected an increase to 62. Estimates ranged from 58 to 66.5. The measure averaged 53.7 in the recession that ended in June 2009.
An improvement in the housing market could provide consumers relief from higher taxes and fuel costs. Another report today showed home prices in 20 U.S. cities rose in the 12 months to December by the most in more than six years, a sign the housing-market recovery is strengthening. The S&P/Case- Shiller index of property values increased 6.8% from December 2011, the biggest year-to-year gain since July 2006.
The Conference Board’s gauge of present conditions improved to 63.3 in February from 56.2 in January. The measure of expectations for the next six months climbed to 73.8 from 59.9.
The share of consumers expecting more jobs to become available in the next six months rose to 16.7% in February from 14.4% the previous month.
The share of respondents who expect an increase in their income in the next six months climbed to 15.7%, the highest since October.