Consumer confidence rose for a third straight week, capping the best quarter in almost eight years as greater purchasing power boosted Americans' views of their finances and buying climate, according to Bloomberg.
The Bloomberg Consumer Comfort Index climbed to 46.2 in the week ended March 29, its second-highest reading since July 2007, from 45.5 the prior week. The index averaged 44.7 in the first quarter, its best performance since the second quarter of 2007.
Bloomberg stated, Americans may be more inclined to spend as a stronger dollar makes imported merchandise cheaper and low gasoline prices lifts discretionary income.
Better employment opportunities, buying conditions and attitudes about household finances lay the groundwork for a pickup in consumer spending, which makes up about 70 percent of the U.S. economy.
Among the three components that make up the Bloomberg comfort index, the gauge of Americans' views of the buying climate increased by 1.5 points to 41.3 last week, the highest since March 2007.
The reading for personal finances climbed to 60.1, the second-highest since October 2007, from 58.9. The sentiment gauge about the state of the economy cooled to a three-week low of 37.1 from 37.7.
Confidence among seniors increased to the highest level since July 2007, while the outlook among the 18-to-34 year-old cohort rose to an 11-week high. It gained among all other age groups except those 45 to 54 years old.
Sentiment among wage earners making $25,000 to $40,000 was the strongest since November 2006. Confidence was also higher among those with incomes greater than $50,000.
The Bloomberg Consumer Comfort Index is a weekly, random-sample survey tracking Americans' views on the condition of the U.S. economy, their personal finances and the buying climate. The survey was formerly sponsored by ABC News since 1985. Beginning in April 2014, immediate details of the report are available by subscription through Langer Research Associates which conducts the survey for Bloomberg. Publicly released details are available only after a significant delay after release of the headline number. In May 2014, Bloomberg changed the series range to zero to 100 versus earlier reports with a range of minus 100 to plus 100.
The pattern in consumer attitudes can be a key influence on stock and bond markets. Consumer spending drives two-thirds of the economy and if the consumer is not confident, the consumer will not be willing to spend. Confidence impacts consumer spending which affects economic growth. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth. Since consumer spending accounts for such a large portion of the economy, the markets are always eager to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. It is easy to see how this index of consumer attitudes gives insight to the direction of the economy. The Bloomberg Consumer Comfort Index is produced by Langer Research Associates of New York. Each release includes results among 1,000 randomly selected adults, with breakdowns available by age, race, sex, education, political affiliation and other groups. The Index has significant long-term correlations, including on a time-lagged basis, with a variety of key economic indicators. The index, produced by Langer Research Associates in New York, is derived from telephone interviews with a random sample of about 250 consumers a week aged 18 or over, and is based on a four-week moving average of 1,000 responses. The percentage of households with negative views on the economy, personal finances and buying climate is subtracted from the share with positive outlooks. The results can range from zero to 100. Prior to May 2014, the data were reported in a range of minus 100 to plus 100.