Consumers' outlooks on US economy improve to four-year high

[WASHINGTON] Consumers are more upbeat about the US economic outlook than at any time in the last four years, bolstered by cheap gasoline and a sustained pickup in hiring.

The Bloomberg Consumer Comfort Index's monthly economic expectations gauge rose by 1 point to 54 in February, the highest since January 2011. The weekly index was little changed at 44.6 in the period ended Feb. 15 compared with 44.3 the previous week.

Household sentiment has climbed in recent months as fuel prices plunged and payroll gains accelerated. Now that energy costs have stabilized, it will probably take a pickup in wages for American consumers to keep feeling optimistic.

The improvement in the monthly outlook index is "a positive sign regardless of a stall in views of current economic conditions," said Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg.

The weekly measure of Americans' views on the current state of the economy climbed to 38.9 from 38.1 the previous period. A gauge of the buying climate, which shows whether now is a good time to purchase goods and services, rose to 38.4 from 37.2. The personal finances index, still the strongest of the three components, fell to a four-week low of 56.6 from 57.4.

Some 26 per cent of Americans surveyed this month said the economy is getting worse, the least since January 2011. Thirty- five per cent said it's getting better.

More employment opportunities are helping quell pessimism as payrolls in January capped their best three months of job growth in 17 years. Still, wages have been slow to rise, meaning that some consumers who have come to count on savings from low gas prices may be pinched as costs start to rebound.

The average price of a gallon of regular gasoline was US$2.27 on Feb 17, up from an almost six-year low of US$2.03 on Jan 25. That compares with an average price of US$3.33 over the past five years.

Cheap gasoline is especially important to lower-income households, who tend to spend a greater share of their earnings than their wealthier counterparts.

The weekly measure of sentiment rose in five of seven income brackets. Attitudes for those making $25,000 to $40,000 were the most positive since December 2007, while those making US$40,000 to US$50,000 suffered the biggest decline, falling to a seven-week low.

Among regions, the Northeast saw the biggest increase in confidence, which climbed to an eight-week high, showing harsh weather hasn't damped spirits in the region. Sentiment in the South also advanced. The West saw confidence decline and attitudes in the Midwest were little changed.

The Bloomberg Comfort Index has been presented on a scale of zero to 100 since May, rather than the previous minus 100 to 100, with the midpoint shifting to 50 from zero. The change is also reflected in the gauge's components. It doesn't affect the measures' relationship to each other or their correlation with other economic indicators. Historical data has been revised and analysis of trends, values and other variables also aren't affected.


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