Consumer confidence increased last week to an almost eight-year high as Americans viewed the U.S. economy in a more favorable light and said it was better time to spend.
The Bloomberg Consumer Comfort Index climbed to 47.9 in the period ended April 5, the highest level since May 2007, from 46.2. A measure of buying conditions was the strongest since November 2006, while attitudes about the economy were the brightest in nine weeks.
The pickup in confidence could signal a rebound in demand, fueling an economy that softened in recent months under the strain of harsh winter weather, a strengthening dollar and tepid global growth.
The increase in the comfort index from a week earlier was the biggest since the end of January. The gauge remains well above last year's average of 36.7, which was the best since 2007.
The measure of Americans' views on the current state of the economy climbed to 39.5 last week from 37.1 in the prior period, the report showed Thursday. The buying climate gauge, which measures whether now is a good time to purchase goods and services, advanced to 43.8 from 41.3.
The index of personal finances rose to 60.5, the second-highest level since October 2007, from 60.1.
Sentiment last week climbed in six of seven income brackets led by households making $100,000 or more, whose confidence soared to the second-highest level since August 2007. Those making $25,000 to $40,000 were the only households to experience a drop in sentiment.
On a regional basis, confidence improved in all areas except the Midwest. In the South, sentiment was the strongest since September 2007.
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.