Confidence among U.S. consumers rose last week to its highest since early October, propelled by gains among almost every income group.
The Bloomberg Consumer Comfort Index increased to minus 31.3 in the period ended Dec. 1, its highest since Oct. 6, from minus 33.7, almost erasing declines caused by the 16-day partial federal government shutdown in October. The reading was the best for any Thanksgiving week since 2007.
An improving job market and widespread discounting by retailers may be making lower-income households more upbeat at the start of the holiday-shopping season. At the same time, the gap between the most and least affluent indicates even stronger wage and employment growth is needed to boost total consumer spending, which accounts for almost 70% of the economy.
“We’re feeling the tailwinds of the wealth effects created by rising equity prices that continue to boost consumer sentiment especially among upper-income households,” said Joseph Brusuelas, a senior economist for Bloomberg LP in New York. “It also reflects a bifurcated society and two-track economy.”
Other figures today showed the economy grew more in the third quarter than previously estimated and fewer Americans filed applications for jobless benefits last week. Jobless claims declined by 23,000 to 298,000 in the week ended Nov. 30, the lowest level in more than two months, according to the Labor Department.
The economy expanded at a 3.6% annualized rate last quarter, reflecting the biggest increase in inventories since early 1998, Commerce Department figures showed. Gross domestic product was initially reported up 2.8% for the quarter.
Stocks declined for a fifth day after the data fueled speculation the Federal Reserve will curb monetary stimulus sooner than projected. The Standard & Poor’s 500 Index dropped 0.1% to 1,790.66 at 9:37 a.m. in New York.
All three components of the comfort index improved last week, led by a gain in personal finances, which advanced to 2.6 from 0.1 the prior period. A measure of Americans’ views of current economic conditions rose to minus 60.4 from minus 62.5 a week earlier.
The buying-climate index climbed to minus 36 from minus 38.7 as more Americans said that now is a good time to make purchases.
Each component was at its highest in two months, largely recovering from a setback triggered by the budget battle and government shutdown in October.
Internet retail sales on the Monday after Thanksgiving, including shopping on personal computers and mobile devices, rose about 20% from last year to almost $2 billion, according to researcher ComScore Inc. Companies such as Amazon.com Inc. and EBay Inc. are luring customers with the promise of daily deals, fast shipping and the ease of buying from the comfort of your home.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.