By Courtney Schlisserman
Jan. 26 (Bloomberg) -- Confidence among U.S. consumers rose in January to the highest level since September 2008 as the labor market improved and Americans became more upbeat about their immediate future.
The Conference Board’s confidence index increased to 55.9, higher than the median estimate in a Bloomberg News survey, from a revised 53.6 in December, a report from the New York-based private research group showed today. The figure reached a record low of 25.3 in February 2009.
A brighter outlook may encourage Americans to spend, adding fuel to an economy that’s received its biggest kick from production gains. Consumer spending that accounts for about 70 percent of the economy has been limited by companies’ reluctance to hire after two years of job cuts.
“It’s a slight improvement, and given where consumer confidence has been the last four, five months, a slight improvement is a nice takeaway,” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “It appears labor market conditions are not getting any worse, and that’s a plus.”
U.S. stocks reversed declines after the report. The Standard & Poor’s 500 Index rose 0.1 percent to 1,098.36 at 10:26 a.m. in New York. Earlier, stocks were lower on concern that China’s move to curb lending will restrain global growth.
Home Prices
A separate report showed home prices rose in November. The S&P/Case-Shiller home-price index of 20 U.S. cities increased 0.2 percent from the prior month on a seasonally adjusted basis after a 0.3 percent rise in October, the group said today in New York. The gauge fell 5.3 percent from November 2008, the smallest year-over-year decline in two years.
Economists forecast confidence would rise to 53.5 from a previously reported 52.9 for December, according to the median of 67 projections in a Bloomberg survey. Estimates ranged from 50 to 57. The index, which has increased the last three months, averaged 45.2 for all of last year.
The Conference Board’s measure of present conditions rose to 25, the highest since August, from 20.2 the prior month. The gain reflected increased optimism about current business conditions and jobs.
The share of consumers who said jobs are plentiful increased to 4.3 percent, the highest since August, from 3.1 percent, according to the Conference Board. The proportion of people who said jobs are hard to get fell to 47.4 percent from 48.1 percent.
Consumer Expectations
The gauge of expectations for the next six months increased to 76.5, the highest since October 2007, from 75.9 the prior month.
The proportion of people who expect their incomes to decrease over the next six months fell to 16.2 percent from 18.4 percent. The share expecting more jobs dropped to 15.5 percent from 16.4 percent.
Buying plans for automobiles, major appliances and real estate rose this month, the report showed.
The figures come as Federal Reserve officials meet today and tomorrow to discuss interest-rate policy. Fed Chairman Ben S. Bernanke and fellow central bankers will keep the target rate for overnight bank lending from zero to 0.25 percent to help nurture the recovery, according to the median estimate in a Bloomberg survey.
Fed Bank of Richmond President Jeffrey Lacker said in a Jan. 15 speech that while employment “is likely to return to an upward trajectory” in the next few months, “even the more optimistic forecasters, though, do not expect a rapid improvement.”
Labor Market
The U.S. lost 85,000 jobs last month after a revised 4,000 gain in November that was the first increase since the recession began in December 2007, according to Labor Department data released earlier this month.
Rising sales have prompted companies to retain workers. Initial jobless claims have averaged 453,700 a week this month, compared with 562,400 in January 2009 and indicating fewer firings.
The unemployment rate is expected to average 10 percent this year, according to the median forecast of a Bloomberg survey. Limited hiring may restrain the expansion.
The world’s largest economy will expand 2.7 percent this year after shrinking 2.5 percent in 2009, according to the median forecast of 53 economists surveyed by Bloomberg from Jan. 5 to Jan. 12. Consumer spending, which accounts for about 70 percent of the economy, will grow 2 percent.
American Express
American Express Co., the biggest U.S. credit-card issuer by purchases, said Jan. 21 that fourth-quarter profit more than doubled as consumer spending increased.
“We still face the challenge of high unemployment levels, depressed real estate values and shrunken household balance sheets, but the overall economy and our company are in stronger shape than they were a year ago,” Kenneth I. Chenault, chief executive officer of New York-based AmEx, said in a news release.
“While the economic recovery now underway is likely to be modest, we expect it to continue,” Chenault said.
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