US Consumer Confidence Rebounds in December

31 Dec 2014 | Author: | No comments yet »

Consumer Confidence in U.S. Rose in December on Job Gains.

A closely watched index of consumers’ outlook rose to 92.6 from 91 in November, the Conference Board said, as their positive views of current conditions more than offset a warier short-term outlook.WASHINGTON — Consumer confidence rose in December as Americans embraced more employment opportunities and persistent declines in prices at the gas pump.

In this Nov. 28 file photo, Target shoppers Kelly Foley, left, Debbie Winslow, center, and Ann Rich use a smartphone to look at a competitor’s prices while shopping shortly after midnight on Black Friday in South Portland, Maine. Consumers are the main driver of economic growth in the U.S., especially in the fourth quarter when households buy gifts and other items during the year-end holiday season.

Gasoline prices that have fallen every day since the end of September left more cash in people’s wallets heading into the holiday gift-giving season. The strongest job growth since 1999 and record stock prices are also fueling optimism and providing a base for further spending gains that will help propel the economy. “Although wage growth is pretty slow, job growth in 2014 has been pretty strong and lower oil prices are providing a tailwind to consumer sentiment,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “We’ll have another stable consumer performance in 2015.” Economists called for a reading of 93.9, according to the Bloomberg survey median. Their views of the labor market improved, with the share saying jobs are “plentiful” increasing to 17.1% from 16.2% and the portion saying jobs are “hard to get” falling to 27.7% from 28.7%. However, according to Redbook Research, “profit margins are expected to be under pressure due to the highly promotional environment.” The small pickup in the board’s measure of economic optimism follows last week’s report from Reuters and the University of Michigan that their final-December consumer sentiment index increased to the highest reading since January 2007.

The Conference Board’s present situation index—consumers’ assessment of current economic conditions—increased to 98.6 from a revised 93.7, originally put at 91.3. Stocks fell, paring a seventh straight December gain for the Standard & Poor’s 500 Index, after the gauge closed at a record for the 53rd time in 2014. The S&P/Case-Shiller index of property values increased 4.5 percent from October 2013, the smallest gain in two years, after rising 4.8 percent in the year ended in September. Still, tumbling gasoline prices are putting a bit of cash back in consumers’ pockets: According to AAA, the average gallon of gasoline nationwide costs $2.27, down from $2.78 a month ago.

The Conference Board’s index of confidence stands close to a seven-year high of 94.1 that was reached in October, corroborating other readings on sentiment. A gallon of regular fuel at the pump cost $2.27 on average yesterday, the lowest since May 2009, based on data from AAA, the largest U.S. motoring group. “We’re a bit more optimistic about the consumer in 2015 than we have been in the past,” Joe Sanderson, the company’s chief executive officer, said on a Dec. 18 earnings call. “It feels like the economy is moving in the right direction,” he said.

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