(Bloomberg) — Consumer confidence climbed last week to match the second-highest level since July 2007, propelled in part by gains among lower-income earners and job seekers as the labor market improves.
The Bloomberg Consumer Comfort Index rose to 45.5 in the period ended March 22 from 44.2 the prior week. Measures of the economy, buying climate and households’ financial well-being all improved.
Spirits brightened for those making less than $50,000 a year in wake of bigger February job gains in services that include the retail and restaurant industries. More confidence about finances signals consumers may be inclined to step up purchases and drive the economy after a projected slowdown in the first quarter.
The index was “bolstered by improved ratings of personal finances, gains among women and improvement among lower- and lower-middle income Americans that may signal a widening recovery,” Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg, said in a statement.
A strengthening labor market and still-cheap gasoline are also delivering a boost to household spending, which accounts for about 70 percent of the economy.
Fewer Americans than forecast filed applications for unemployment benefits last week, a Labor Department report showed Thursday. Jobless claims dropped by 9,000 to 282,000 in the period ended March 21, the lowest level since mid-February.
Among the three components of the Bloomberg comfort index, the gauge of Americans’ views on the state of the economy rose to 37.7 last week from 37.2. An index of the buying climate, showing whether this is a good time to purchase goods and services, increased by 1.5 points to 39.8, matching the second- highest reading since April 2007. A measure of personal finances climbed to 58.9 from 57.1.
Confidence improved for three of four groups of wage earners making less than $50,000 a year. Sentiment among Americans making $25,000 to $40,000 was the strongest since February 2007.
Women were more optimistic than at any time since July 2007, while confidence among seniors, the unemployed and renters was the highest since the start of the last recession. The comfort index for Democratic voters was the highest in 14 years.
The Bloomberg Comfort Index has been presented on a scale of zero to 100 since May 2014, rather than the previous minus 100 to 100, with the midpoint shifting to 50 from zero. The change is also reflected in the gauge’s components. It doesn’t affect the measures’ relationship to each other or their correlation with other economic indicators. Historical data has been revised and analysis of trends, values and other variables also aren’t affected.