The Conference Board’s index of confidence among U.S. consumers climbed to 69.6 in February, beating all estimates in a Bloomberg survey, after a revised 58.4 in January.
Changes in confidence could affect how much consumers spend on items such as cars and houses going forward. Household spending in the U.S. rose 0.2% in January, a Commerce Department report showed today, even as incomes dropped 3.6%, the most in 20 years.
The U.S. job market is improving, which could provide a boon to American buyers. Jobless claims decreased by 22,000 to 344,000 in the holiday-shortened week that ended Feb. 23, the Labor Department reported in Washington. The median estimate of 44 economists surveyed by Bloomberg projected 360,000 applications.
Consumers have also benefited from historically low interest rates, which have helped U.S. auto sales to jump to near pre-recession levels. U.S. light-vehicle sales probably climbed 3.7% in February to 1.19 million, based on the average estimate of 10 analysts in a Bloomberg survey.
The housing market is on the mend, and appreciating property values may give consumers a boost that will allow them to spend on goods and leisure activities, such as gambling.
”I do see several meaningful encouraging signs of more rapid economic growth ahead in this country in 2014,” said Gary W. Loveman, chief executive officer of Caesars Entertainment Co., in a Feb. 25 fourth quarter earnings call. The Las Vegas- based company is the largest owner of U.S. casinos.
”Whether and when these improvements turn into more prosperous gaming markets, of course, remain to be seen. But it’s good to some signals of a more robust recovery ahead of us.”
Sentiment could be suffering, however, after Congress allowed the tax that funds Social Security to revert to 6.2% from 4.2% starting in January. That puts the levy at its 2010 level and will cost someone who earns $50,000 annually an extra $83 a month.
Gasoline prices are also on the rise, taking money out of consumer’s pockets. The price of a gallon of regular gasoline at the pump averaged $3.78 on Feb. 27 compared with $3.35 a month earlier, according to data from AAA, the largest U.S. motoring group.