The outlook for confidence may bear on whether recent strength in spending can be sustained. Retail sales increased 1.1% in February, double the median forecast of economists surveyed by Bloomberg and the most in five months, Commerce Department figures showed this week.
A better job outlook may be help underpin spending even as confidence wanes. Payrolls rose by 236,000 workers in February and the number of people let go in January dropped to the lowest level in records going back 12 years, according to figures from the Labor Department. The jobless rate dropped to a four-year low of 7.7% last month from 7.9%.
Also, the housing market rebound is boosting consumers’ net worth. The S&P/Case-Shiller index of property values in 20 U.S. cities increased 6.8% in December from the same month in 2011, the biggest year-to-year gain since July 2006.
Nonetheless, consumers are contending with a higher payroll tax. The levy that funds Social Security reverted to its 2010 level of 6.2% from 4.2% as of January, and an American who earns $50,000 is taking home about $83 less a month as a result.
Households are also facing higher fuel costs. The price of a gallon of regular gasoline is hovering around $3.70 after hitting a low of $3.22 on Dec. 19, according to figures from AAA, the largest U.S. auto group. At the same time, the price has fallen from a recent high of $3.79 on Feb. 26.
David C. Novak, chief executive officer of Louisville, Kentucky-based Yum! Brands Inc., which operates and franchises restaurants such as Taco Bell, KFC and Pizza Hut, said their research indicates consumers remain uneasy.
“Nobody is really taking a victory lap,” Novak said in a Mar. 13 presentation. “People want to have confidence, but I don’t think they necessarily have it.”
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