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Business Title: Consumer Sentiment in U.S. Climbs to Five-Month High Following Labor Gains By Courtney Schlisserman Nov. 12 (Bloomberg) -- Consumer confidence increased in November for the first time in three months, a signal gains in employment and wages are starting to lift Americans’ spirits. The Thomson Reuters/University of Michigan preliminary sentiment index rose to 69.3, in line with the median forecast of economists surveyed by Bloomberg News and the highest level since June, from 67.7 in October. The measure averaged 88.9 in the five years to December 2007, when the last recession began. Growing confidence raises the odds retailers from Macy’s Inc. to Wal-Mart Stores Inc. will see sales climb during the holiday season, typically their biggest shopping and hiring period. The report also signals the end of political campaigning following the Nov. 2 election may be helping dispel pessimism over the economic outlook. “It’s a very good sign for spending in the months ahead,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “We are seeing a little bit better numbers on the job front,” he said. Additionally, “the uncertainty we had approaching the elections is over and the improvement in the stock market suggests to a lot of Americans that maybe the economy is slowly improving.” Economists forecast the measure would increase to 69, according to the median of 66 projections in the Bloomberg survey. Estimates ranged from 66 to 75. Stocks held earlier losses following the report on concern China will try to rein in inflation and economic growth by raising interest rates. The Standard & Poor’s 500 Index fell 0.5 percent to 1,207.29 at 10:23 a.m. in New York. Current Conditions The University of Michigan’s measure of expectations for six months from now, which more closely projects the direction of consumer spending, climbed to 62.7 from 61.9 last month. The measure of current conditions, a reflection of Americans’ perceptions of their financial situation and whether it is a good time to buy big-ticket items like cars, rose to 79.7 from 76.6 in October. Signs the labor market is improving may be helping to reassure consumers. Employers added 151,000 workers to payrolls in October, boosted the workweek and raised wages, a Labor Department showed last week. The average number of Americans filing claims for jobless benefits over the past four weeks dropped to the lowest level in two years, the agency said this week. Macy’s, the second-largest U.S. department store chain, last week reported a 2.5 percent gain in sales for October and raised its profit forecast for the second half of the year. This week, the company posted earnings for the third quarter that were stronger than analysts forecast as sales rose. Month End Gains “While we experienced some softness in sales early in October given the unseasonably warm weather, we ended the month with a strong trend going into the holiday selling season,” Chief Executive Officer Terry Lundgren said in a Nov. 4 statement. The National Retail Federation has forecast November- December holiday sales will rise by 2.3 percent from a year ago, the most since 2006. Consumer spending, which accounts for about 70 percent of the economy, will grow at a 2.4 percent annual pace this quarter, according to the median forecast of economists surveyed by Bloomberg this month. That is up from the 2 percent gain projected last month. Purchases increased at a 2.6 percent rate in the third quarter, the most since the end of 2006, and the economy expanded at a 2 percent annual pace, according to figures from the Commerce Department. Voter Discontent Americans’ discontent with the economy gave Republicans a majority in the House of Representatives and allowed the party to add six seats in the Senate. The end of campaigning may help ease uncertainty about the direction of policy. “Elections have a way of depressing the way people feel about things,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “We’ve certainly seen a number of episodes where consumer sentiment has fallen leading up to elections and then got a bit of a pop.” Rising stock prices may also be helping prop up sentiment and spending. The Standard & Poor’s 500 Index rose 3.7 percent in October after an 8.8 percent gain the prior month, the best back-to-back performance in more than a year. Fed Actions Shares rallied as Federal Reserve policy makers telegraphed they stood ready to take addition action to spur growth, bring the jobless rate down and prevent prices from falling. The central bank last week announced plans to buy an additional $600 billion in Treasury securities through June in a bid to lower borrowing costs. The average interest rate on a 30-year fixed mortgage dropped to 4.17 percent in the week ended yesterday, according to Freddie Mac. That was the lowest level since the McLean, Virginia-based mortgage-finance started keeping records in 1971. Consumers in today’s sentiment survey said they expect an inflation rate of 3 percent over the next 12 months, compared with 2.7 percent projected in October. Over the next five years, the measure tracked by Fed policy makers, Americans expect a 2.8 percent rate, the same as forecast last month.
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#1. To: Brian S (#0)
That's good news, but the market is taking another beating today. Businesses and investors are not at all confident at the change coming to the U.S. as a result of last Tuesday's election. This is the biggest one- week drop in 3 months.
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