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Business Title: Consumer Confidence Reaches Second-Highest Level in Four Years Consumer confidence last week reached the second-highest level in four years as more Americans said it was a good time to shop. The Bloomberg Consumer Comfort Index was little changed at minus 34.7 in the period to March 25, close to the minus 33.7 reading two weeks earlier that was the strongest since March 2008. Over the past three weeks, at least 30 percent of households said they had a favorable view of the buying climate, the longest stretch since early 2008. An improving labor market is lifting the moods of those looking for work as the unemployed became more upbeat than at any time since January 2008. Job and income growth is providing consumers with the means to withstand higher fuel costs and underpinning sales of cars and other expensive items. Fewer firings and more hiring “has bolstered consumer confidence despite rising gasoline prices,” said Joe Brusuelas, a senior economist at Bloomberg LP in New York. “The improvement in the labor market does suggest that households expect to increase purchases of big-ticket durables to replace worn-out stock.” The comfort index was minus 34.9 in the week ended March 18. Since its inception in December 1985, the comfort index has averaged minus 15.2. The Bloomberg comfort survey has a 3-point margin of error, and the index has been stuck above minus 40 -- the level associated with recessions or their aftermath -- for seven straight weeks. The number of applications for unemployment benefits dropped last week to the lowest level in almost four years, adding to evidence the labor market is strengthening, figures from the Labor Department also showed today. Jobless claims fell 5,000 in the week ended March 24 to 359,000, the lowest since April 2008. With the report, the government also issued revisions dating back to 2007 that lifted readings for the past few weeks. The economy grew at a 3 percent annual rate in the last three months of 2011, the most in more than a year and the same as previously estimated, according to data from the Commerce Department issued today. The report also showed corporate profits climbed at the slowest pace in three years. Stocks dropped as the claims numbers and revisions disappointed investors. The Standard & Poor’s 500 Index fell 0.6 percent to 1,396.75 at 9:42 a.m. in New York. The index of whether it’s a good time to buy increased to minus 37 from minus 38.6. The measure of Americans’ views of the state of the economy dropped to minus 66.7 last week from minus 64.9 the prior week, today’s report showed. The gauge of personal finances was little changed at minus 0.4 compared with minus 1.3 the prior week. Brighter job prospects and rising wages are giving consumers the wherewithal to sustain spending in the face of higher prices at the gas pump. Retail sales climbed 1.1 percent in February, the biggest gain in five months after a 0.6 percent rise a month earlier that was larger than previously estimated, figures from the Commerce Department showed this month. Clothing stores and auto dealers were among those showing improving demand last month. Cars and light trucks sold in February at the fastest pace in four years, according to Ward’s Automotive Group. “We are beginning to see some signs that the economy is slowly starting to improve,” Howard Levine, chairman and chief executive officer at Family Dollar Stores Inc. (FDO), said in a conference call with analysts on March 28. “Yet consumers still face some headwinds, especially from rising gas prices, which could strain discretionary purchases and impacts the pace of recovery.” A gallon of regular unleaded gasoline has increased to a 10-month high of $3.92 as of yesterday, according to AAA, the nation’s largest automobile association. The labor market is helping cushion the hit to pocketbooks. Payrolls grew by 227,000 in February after a 284,000 gain in January, capping the best six months of job growth since 2006. The unemployment rate held at a three-year low of 8.3 percent following five consecutive declines. Worker pay jumped in the last six months of 2011 by the most in almost five years. Today’s report also showed sentiment among women climbed to minus 36.2, the highest since March 2008, from minus 41.3. The comfort gauge among Democrats climbed to the highest level since November 2007. The Bloomberg Consumer Comfort Index is based on responses to telephone interviews with a random sample of 1,000 consumers age 18 and over. Each week, 250 respondents are asked for their views on the economy, personal finances and buying climate; the percentage of negative responses is subtracted from the share of positive views and divided by three. The most recent reading is based on the average of responses over the previous four weeks. The comfort index can range from 100, indicating every participant in the survey had a positive response to all three components, to minus 100, signaling all views were negative. The margin of error for the headline reading is 3 percentage points. Field work for the index is done by SSRS/Social Science Research Solutions in Media, Pennsylvania.
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