Consumer confidence rose in December as Americans embraced more employment opportunities and persistent declines in prices at the gas pump.
The Conference Board’s index increased to 92.6 from a revised 91 in November that was stronger than initially estimated, the New York-based private research group said today. A measure of current conditions advanced to the highest in almost seven years.
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. Estimates of 70 economists ranged from 86 to 101. The Conference Board’s measure averaged 96.8 during the last expansion and 53.7 during the recession that ended in June 2009.
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 500 dropped 0.4 percent to 2,083.07 at 10:44 a.m. in New York.
The group’s gauge of present conditions rose to 98.6, the highest since February 2008, from 93.7 in November. The share of Americans who said jobs were plentiful increased to a four-month high of 17.1 percent from 16.2 percent.
The index of consumer expectations for the next six months cooled to 88.5 this month from 89.3.
Another report today showed home prices in 20 U.S. cities rose at a slower pace in the year ended in October. 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. Nationally, prices climbed 4.6 percent after a 4.8 percent gain in the 12 months through September.
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. The Thomson Reuters/University of Michigan final December gauge and the weekly Bloomberg Consumer Comfort Index were also the strongest since 2007.
Americans indicated they’re ready to purchase more appliances and new cars, the Conference Board’s figures showed. More people said they planned to buy new refrigerators, washing machines and vacuum cleaners within the next six months. Buying intentions for new automobiles were the strongest since August.
Fewer respondents expect their incomes to decline in the next six months, with the share falling to an almost seven-year low of 10 percent. More expect their incomes to stay about where they are now.
The Conference Board’s data showed the share of consumers that said jobs were hard to get dropped to 27.7 percent, the lowest since March 2008, from 28.7 percent in November.
At the same time, fewer consumers expected more jobs to become available in the next six months. The share fell to an eight-month low of 14.7 percent from 15.5 percent.
Americans have been more successful finding work. In November, employers took on a net 321,000 jobs, Labor Department data showed. The economy has added 2.7 million workers so far this year, the most since 1999. The jobless rate stands at 5.8 percent, the lowest in more than six years.
Cheaper gasoline has freed up money for purchases of other goods and services. Consumer spending helped the economy expand in the third quarter at the fastest rate in 11 years. 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.
Sanderson Farms Inc., a poultry producer based in Laurel, Mississippi, is among companies that are more upbeat about the consumer.
“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.
Fourth-quarter sales at Sanderson Farms topped estimates at $760.9 million versus $757.3 million consensus.