Consumer comfort climbs to eight-month high
Washington - Consumer sentiment last week reached an eight-month high, reflecting broad-based gains that indicated even wealthy Americans were less concerned about tax increases and fiscal policy challenges heading into 2013.
The Bloomberg Consumer Comfort Index rose to minus 31.8 in the period ended Dec. 30, its highest since April, from minus 32.1 a week earlier. For the year, the index climbed 12.9 points, the biggest annual improvement since 1998. Americans earning $100,000 or more reported their most optimistic reading in more than two years.
"The rebuilding of wealth and modest income gains permitted consumer sentiment to overcome slow growth and a politically divisive environment in late 2012," said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. Rising home values and low interest rates in particular are buoying wealthier households, helping to overcome the threat of higher taxes in 2013, he said.
The index finished the year at its best level since mid-April, less than half a point from the 2012 high it reached twice that month. It has held above its traditional trouble zone, the minus 40s, for 15 straight weeks, a positive run seen last in early 2008.
For the year, the index averaged minus 38.1, the most since 2007. It remains below its long-term average of minus 15.8.
The Labor Department reported initial jobless claims last week climbed by 10,000 to 372,000. The closing of some state employment agencies during the holidays prompted the government to estimate some figures.
The comfort survey, conducted in the last week of the year when President Barack Obama and Congress remained at odds over taxes and government spending, showed a more positive outlook among Democrats than other voters.
The comfort index was minus 19.8 among registered Democrats, compared with minus 35.8 for Republicans and minus 33.9 for Independents. Democrats have had a rosier outlook than Republicans for a record 41 straight weeks.
The index coincides with improvements in other areas, including housing. Residential real estate, which triggered the economic downturn that ended in June 2009, is rebounding, with resales at their strongest pace in more than two years and building permits at a four-year high.
Among Americans with annual incomes of $100,000 or more, the Bloomberg index rose to 11.8 from 6.6 a week earlier, capping nine weeks in positive territory. For those making $50,000 or more, the gauge climbed to minus 4.1, the highest reading since January 2008.
That contrasts with the mood of the lowest wage earners. The gauge for those earning less than $15,000 a year was minus 72.5.
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