U.S. Consumer Confidence Rises Most Since ’03. By Timothy R. Homan

Consumer confidence climbed in November by the most in more than eight years as Americans grew more upbeat about employment and income prospects.
The Conference Board’s index increased to 56 from a revised 40.9 reading in October, the biggest monthly gain since April 2003, figures from the New York-based private research group showed today. The gauge, at a four-month high, exceeded the most-optimistic forecast in a Bloomberg News survey of economists.
Rising sentiment may help sustain sales during the holiday shopping season, which accounts for as much as 40 percent of retailers’ annual revenue. Fewer new claims for jobless benefits and cheaper fuel costs are easing the burden for American consumers, whose spending accounts for about 70 percent of the economy.
“The improvement in the labor market must be offering greater comfort to consumers,” said David Semmens, a U.S. economist at Standard Chartered Bank in London. “This points to a consumer that is feeling more holiday cheer.”


The median projection in the Bloomberg survey called for a confidence reading of 44. Estimates of 70 economists ranged from 37 to 49.6. The index averaged 53.7 during the 18-month recession that ended in June 2009.
Stocks extended gains after the report, with the Standard & Poor’s 500 Index (SPX) climbing 0.9 percent to 1,203.04 at 10:19 a.m. in New York. The yield on the benchmark 10-year Treasury note rose to 2.03 percent from 1.97 percent late yesterday.

Deficit Plan

Results of the Conference Board’s survey reflected responses from consumers by Nov. 15, a week before the congressional supercommittee announced it failed to agree on a deficit-reduction plan.
Today’s figures exceed the gains in other recent sentiment surveys. The Bloomberg Consumer Comfort Index’s monthly expectations gauge climbed in November to the highest reading since July. The Thomson Reuters/University of Michigan final index of consumer expectations for six months from now rose in November to the highest level in five months.
Residential real estate prices dropped more than forecast in the year ended September, showing the industry at the center of the 2008 financial crisis continues to struggle, another report today showed.

Home Values

The S&P/Case-Shiller index of property values in 20 cities dropped 3.6 percent from September from the same month in 2010 after decreasing 3.8 percent in the year ended August, the group said today in New York. The median forecast of 32 economists in a Bloomberg survey projected a 3 percent decrease.
The Conference Board’s data showed a measure of present conditions increased to 38.3 from 27.1. The measure of expectations for the next six months rose to 67.8 from 50.
The percent of respondents in the Conference Board survey expecting more jobs to become available in the next six months climbed to 12.9, a four-month high, from 10.8 in October.
Applications for jobless benefits are close to a seven- month low. Initial claims in the week ended Nov. 19 stood at 393,000, near the 391,000 in the previous period that were the fewest since April 1, according to Labor Department figures.
The proportion expecting their incomes to rise over the next six months rose to 14.9 percent from 11.1 percent.
The share of consumers who said jobs were currently plentiful climbed to 5.8 percent, the highest since May 2009, from 3.6 percent. Confidence rose in eight of nine U.S. regions, according to today’s report.

Stock Market

The report also showed that 24.9 percent of respondents said they expect stocks to gain in the next year. Confidence picked up in all income levels.
In Europe, the debt crisis is depressing consumer attitudes. European confidence in the economic outlook dropped more than economists projected in November as the 17-nation euro region moved closer to recession.
An index of executive and consumer sentiment in the euro area fell to 93.7 from 94.8 in October, the European Commission in Brussels said today. That’s the lowest since November 2009. Economists forecast a drop to 93.9, the median of 31 estimates in a Bloomberg survey showed.
Americans, meantime, spent a record $52.4 billion during the Thanksgiving weekend, kicking off the holiday shopping season. Shoppers took advantage of deals and earlier opening hours at retailers from Gap Inc. to Wal-Mart Stores Inc. to Toys “R” Us Inc. With the monthly U.S. unemployment rate averaging 9 percent this year, the results suggest consumers with jobs remain willing to spend.
Retail sales climbed 16 percent, and shoppers spent $398.62 on average, up from $365.34 a year earlier, the National Retail Federation said yesterday, citing a survey from BIGresearch. Web sales on Black Friday surged 26 percent to $816 million and 18 percent to $479 million on Thanksgiving Day, said ComScore, a Reston, Virginia-based research firm.
Holiday sales account for about 20 percent to 40 percent of retailers’ annual revenue, according to the National Retail Federation.