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Portfolio > Economy & Markets

American consumers most optimistic about economy in 4 years

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(Bloomberg) — Americans’ expectations for the economy improved in January to reach the highest level in four years as the cost of gasoline continued to fall and the job market strengthened.

A measure tracking the economic outlook rose by 2 points to 53, the strongest since January 2011, data from the Bloomberg Consumer Comfort Index showed Thursday. Thirty-six percent said the economy is getting better, up from 32 last month and the second-largest share since 2002. The weekly sentiment index eased to 44.7 in the period ended Jan. 18 from 45.4.

Gasoline prices approaching a nationwide average of $2 a gallon and the lowest unemployment rate since mid-2008 are making households more upbeat about the expansion. Stronger wage growth would help to further propel sentiment and spark bigger gains in consumer spending.

The weekly comfort measure “has rallied impressively, improving at least numerically in all but three of the past 12 weeks,” Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg, said in a statement.

More Americans than forecast filed applications for unemployment benefits last week, a sign of lingering holiday turnover, another report showed. Jobless claims decreased by 10,000 to 307,000 in the week ended Jan. 17, the Labor Department said. The median forecast in a Bloomberg survey called for 300,000 claims.

Stocks Advance

Stocks climbed as European Central Bank president Mario Draghi announced an expanded asset-purchase program to spur growth and counter deflationary pressures. The Standard & Poor’s 500 Index advanced 0.4 percent to 2,039.92 at 9:34 a.m. in New York.

The brighter outlook for the world’s largest economy was paced by gains among women, full-time workers, 18- to 34-year- olds, residents in the West and Democrats. Married adults and those with at least some college education also registered advances.

While the weekly measure of confidence dropped, it was the second-strongest in seven years. The comfort index averaged 44.8 in 2007, the last year of the past expansion.

All three sub-indexes cooled last week. A gauge on the current state of the national economy decreased to 38.9 from 39.1. A measure of personal finances fell to 56.6 from 57.4, and the buying climate index declined to 38.5 from 39.9.

Gasoline Prices

Lower energy prices and job gains are underpinning sentiment. The cost of a gallon of regular gasoline fell to $2.04 as of yesterday, the lowest since April 2009, according to figures from AAA, the largest U.S. auto organization. About 3 million more Americans found work in 2014, the most in 15 years, and unemployment in December dropped to 5.6 percent, Labor Department data showed.

Comfort gauges for almost every income group showed a decrease last week, with confidence among those making less than $15,000 a year at its lowest in five weeks. Sentiment among Americans earning $100,000 or more advanced from the prior period.


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