Growing faith in U.S. economy underpins comfort

Mortgage Rates

During that time, mortgage rates have skyrocketed amid concern Federal Reserve policy makers will scale back on the amount of bonds they buy each month. The rate on a 30-year fixed home loan shot up to 3.81% in the week ended May 30, the highest level in a year, from 3.35% in the week ended May 2, according to figures from Freddie Mac. It reached a record-low 3.31% in late November.

Other reports on buyer sentiment have followed the comfort index in showing improvement. The Conference Board’s confidence index rose in May to the highest level since February 2008, while the Thomson Reuters/University of Michigan sentiment gauge reached its highest level since July 2007.

A housing market rebound could be brightening moods. The S&P/Case-Shiller index of property values in 20 cities increased 10.9% in the year to March, the biggest 12-month gain since April 2006, a report showed last month.

Consumer Spending

Household purchases climbed at a 3.4% annualized rate in the first quarter, almost twice as fast as the prior quarter’s 1.8% gain. That helped the economy strengthen, with gross domestic product rising at a 2.4% pace compared with a 0.4% advance in the last three months of 2012, a Commerce Department report showed last week.

Rising property and stock values are helping Americans cope with an increase in payroll taxes, after the levy funding social security reverted to its 2010 level of 6.2% in January from a reduced 4.2% rate.

The gauge for consumers earning between $75,000 and $100,000 climbed to 8.9 last week, its highest level since November 2007, eclipsing confidence among highest wage earners. Among Americans with annual incomes of $100,000 or more, the Bloomberg comfort index retreated to 8 from 8.3 a week earlier.

Households earning between $50,000 and $75,000 a year declined for the fourth week, falling to minus 23.1 from minus 22.4.

Restaurants are among businesses struggling to overcome a tough environment for those in lower-income brackets.

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