Consumer confidence climbed last week to a seven-year high as cheaper gasoline and traction in the labor market boosted Americans’ views of the buying climate and economy.
The Bloomberg Consumer Comfort Index increased to 43.1 in the week ended Dec. 21, its highest level since October 2007, from 41.7 in the prior period. All three components of the index advanced.
The cheapest gasoline in five years and the strongest employment gains since 1999 are keeping households upbeat about prospects for the expansion. Such optimism will probably provide more fuel for consumer spending, which helped the economy expand in the third quarter at the fastest rate in 11 years.
“Consumer sentiment forged ahead confidently this holiday season,” said Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg. “After many fits and starts, the index has been on a roll lately.”
Fewer Americans than forecast filed applications for unemployment benefits last week, a sign the job market is making progress as the year ends, Labor Department figures showed earlier. Jobless claims declined by 9,000 to 280,000 in the period ended Dec. 20, the fewest since early November.
Stocks were little changed after benchmark indexes closed at records. The Standard & Poor’s 500 Index rose 0.1 percent to 2,085.03 at 9:33 a.m. in New York.
The Bloomberg measure of whether it’s a good time to make purchases rose to 39.8 last week, the best reading since April 2007, from 38.4. The gauge of personal finances increased to 54.7 last week from 54.1 in the previous survey.
Sentiment on the state of the national economy climbed to 34.7, also the strongest since October 2007, two months before the last recession began, from 32.5 in the prior period.
The world’s largest economy expanded at a 5 percent annualized rate in the three months ended in September as consumer spending accelerated, Commerce Department figures showed yesterday.
Every income group showed an increase in comfort last week, with those making $100,000 or more registering the most optimistic reading in more than seven years.
Falling prices at service stations are generating more disposable income for households. The average cost of a gallon of regular gasoline was $2.38 as of Dec. 22, the lowest since May 2009, according to auto group AAA.
Along with fewer job cuts, payroll gains are on pace for their best year since 1999, averaging almost 241,000 this year through November. The Labor Department will release December figures Jan. 9.
The job gains have helped lift confidence among full-time workers, which advanced last week to 50.2, the best level since July 2007, from 47.8 in the prior period.
The figures showed differences in mood among political groups. Democrats had the strongest sentiment reading since July 2001, while confidence among Republicans reached a two-week high. Independents were the most upbeat since November 2007.
The Bloomberg Comfort Index has been presented on a scale of zero to 100 since May, rather than the previous minus 100 to 100, with the midpoint shifting to 50 from zero. The change is also reflected in the gauge’s components. It doesn’t affect the measures’ relationship to each other or their correlation with other economic indicators. Historical data has been revised and analysis of trends, values and other variables also aren’t affected.