Growing faith in U.S. economy underpins comfort

Consumer confidence last week was unchanged near a five-year high as Americans had the least pessimistic views on the economy since 2008.

The Bloomberg Consumer Comfort Index held at minus 29.7 in the period ended June 2. Sentiment about the current state of the economy improved to the best level since January 2008, and opinions on personal finances were at a one-year high.

Rebounds in housing and stocks have helped upper-income Americans recover much of the wealth lost during the recession, while a drop in firings is probably making the average worker feel more secure in their jobs. At the same time, wage gains that have barely kept up with inflation and a jump in interest rates may be starting to suppress buying plans, raising concern about the outlook for spending.

“People are more certain about their own employment and wage prospects,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “The rising equity and home prices are certainly having an interesting effect on upper-income Americans, who seem to have captured a portion of the recovery in overall national wealth.”

Sentiment for households earning between $75,000 and $100,000 annually reached a five-year high, eclipsing confidence among the highest income earners.

Fewer Americans filed applications for unemployment benefits last week, indicating companies are confident demand will be sustained in the face of federal budget cuts and tax increases, other figures showed today.

Fewer Claims

Jobless claims decreased by 11,000 to 346,000 in the week ended June 1 from 357,000, the Labor Department reported. The total number of people receiving benefits declined to 2.95 million. It reached a five-year low of 2.92 million two weeks ago.

Stocks rose as investors consider whether the Federal Reserve will begin scaling back stimulus. The Standard & Poor’s 500 Index climbed 0.1% to 1,609.98 at 9:54 a.m. in New York.

Two of the comfort index’s components improved last week. The gauge on consumers’ current view about the economy climbed to minus 53 from minus 54.7, while the measure of personal finances rose to 4.6, its best reading since April 2012, from 2.8.

Fewer consumers said the time was right to purchase needed items, as a measure of the buying climate fell to minus 40.8, a two-month low, from minus 37.3 a week earlier. The measure reached a more than five-year high of minus 31.5 four weeks ago.

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