May 1 (Bloomberg) -- Consumer confidence rose last week to its second-highest level in more than six years, propelled by growing optimism over household finances and the buying climate.
The Bloomberg Consumer Comfort Index rose to 37.9 for the week ended April 27, a level surpassed just once since January 2008. A measure of whether it’s a good time to make purchases reached its highest point since November 2007 and the outlook on personal finances was the best since April 2008.
The gain reflects an improved job market and increased earnings ahead of tomorrow’s employment report. Gas prices, the struggling housing market and persistent long-term unemployment continue to present risks to consumer confidence and spending, which accounts for almost 70 percent of the economy.
“Consumers are fairly confident in their own personal financial situations, predicated on the modest improvement in employment conditions and a sharp decline in the pace of firings,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “It bodes well for a modest year of spending growth.”
Starting with today’s release, the comfort index is being presented on a scale of zero to 100 rather than the previous minus 100 to 100, with the midpoint correspondingly shifting to 50 from zero. The change is cosmetic and doesn’t affect the gauge’s components, their relationship to each other or their correlation with other economic indicators. Historical data has been revised and analysis of trends, values and other variables aren’t affected.
Another report today showed consumer spending surged in March by the most in almost five years as warmer weather brought shoppers back to car dealerships and malls, a sign the economy gained momentum heading into the second quarter.
Household purchases, which account for about 70 percent of the economy, climbed 0.9 percent, the most since August 2009, after a 0.5 percent gain in February that was larger than previously estimated, Commerce Department figures showed. Incomes increased by the most in seven months.
Stocks were little changed, after the Dow Jones Industrial Average rose to a record yesterday. The Dow climbed less than 0.1 percent to 16,585.72 at 9:41 a.m. in New York.
The comfort survey buttresses hopes for an improved jobs report tomorrow, said Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg. Payrolls probably climbed by 215,000 workers in April after a 192,000 increase the previous month, according to the median forecast in a Bloomberg survey of economists before tomorrow’s data.
Today’s comfort survey found improved optimism among those who had attended some college courses, with the index rising to 44.1, the best since December 2007. For those with a high-school diploma, sentiment worsened to 27.4, its lowest in 11 weeks.
Differences among men and women also were evident. For men, the comfort index was unchanged at 43.4, its best reading since January 2008. Among women, it rose to 32.7 from 31.5. That put the gender gap at 10.7 points, more than double the average 5.3 points since early 2008, Langer said.
Regionally, the outlook in the South rose to 39.3, its best since late 2007, from 38.1. The gauge improved in the Midwest and West and fell in the Northeast.
Harsh winter weather sent a chill through the U.S. economy in the first quarter, with gross domestic product growing by just 0.1 percent compared to 2.6 percent at the end of last year. Still, the Federal Reserve remains upbeat about the recovery’s prospects and pared its monthly asset purchases yesterday for the fourth time.
“Growth in economic activity has picked up recently, after having slowed,” Federal Open Market Committee said after meeting in Washington. “Household spending appears to be rising more quickly.”
The Bloomberg Consumer Comfort Index conducts telephone surveys with a random sample of 1,000 consumers ages 18 and older. Each week, 250 respondents are asked for their views on the U.S. economy, personal finances and buying climate.
Field work for the survey is done by SSRS/Social Science Research Solutions of Media, Pennsylvania. The survey has been conducted continuously since 1985.