Consumer Confidence Rises

More good news. Consumer confidence had its biggest gain since 2003.

Consumer confidence rose in November by the most in more than two years as falling gasoline prices encouraged shoppers before the start of the holiday season.
The Conference Board’s consumer confidence index rose to 98.9 from a revised 85.2 in October, the New York-based research group said today. The gauge was at 105.5 in August, before the full effects of the recent hurricanes were measured, and averaged 97.5 over the past five years.
Falling fuel prices after post-hurricane highs are increasing confidence and spending, economists said. Consumers splurged over the Thanksgiving weekend at discount retailers such as Wal-Mart Stores Inc., leading the National Retail Federation to predict this will be the second-biggest holiday selling season since 1999. Job creation is also helping sentiment.
“Confidence was healthy,” said Alan Ruskin, director of U.S. research at in New York. “A lot of it is normalization post-hurricanes, and the energy prices coming off their highs is part of that.”
The Conference Board compiles its index of consumer confidence by surveying 5,000 households on general economic conditions, their employment prospects and spending plans. A Bloomberg News survey of 58 economists expected the index to rise to 90.2, with estimates ranging from 86 to 95.3. October confidence was originally reported to be 85. The November increase was the most since April 2003.
The component of the index that tracks consumers’ expectations for the next six months increased to 88.8 from 70.1 in October, the biggest gain since April 2003. The gauge of optimism about the present situation rose to 114 from 107.8, the biggest jump since December 2004.
The share of consumers that said jobs were hard to get fell to 23.2 from 25.3 percent last month. The share who said jobs were plentiful in November rose to 20.8 percent from 20.7 percent.
The percentage of consumers expecting to buy a home increased to 3.1 percent from 2.8 percent. The percentage that plan to purchase major appliances rose to 29.1 percent from 25 percent. The share of those who expect to buy a car fell to 4.9 percent from 6.4 percent.
The results compare with those from the University of Michigan’s survey of consumer sentiment, which rose to 81.6 in November from a 13-year low of 74.2 the previous month, according to a report released Nov. 23.
U.S. new home sales unexpectedly rose to a record last month, suggesting people bought houses in anticipation of even higher mortgage rates, a government report showed today. Purchases increased 13 percent, the biggest rise since April 1993, to a 1.424 million annual rate from a September’s 1.26 million pace, the Commerce Department said in Washington.

Posted by on November 29th, 2005 at 12:49 pm

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