(Bloomberg) U.S. consumer confidence last week held close to the highest level in almost three years as more Americans said their finances were in good shape.
The Bloomberg Consumer Comfort Index, formerly the ABC News U.S. Weekly Consumer Comfort Index, was minus 39.3 in the period to Feb. 27, compared with minus 39.2 the prior week, a report today showed. Respondents' view of their financial situation climbed to an almost two-year high.
A two-percentage-point cut in payroll taxes this year, part of the compromise reached by President Barack Obama and Congressional Republicans, is trickling into consumers' bank accounts. The extra cash and an improving job market are helping cushion the pinch from the biggest one-week jump in gasoline prices since the aftermath of Hurricane Katrina in 2005.
"Consumers are comfortable with where we are right now," said Lindsey Piegza, an economist at FTN Financial in New York. "It's very likely we'll see the income from the tax cuts seep into retail sales. There's increasing optimism on better times to come, even though rising gas prices are a cause for some concern."
Stocks rose as an unexpected drop in jobless claims bolstered confidence the labor market is improving. The Standard & Poor's 500 Index gained 1.3% to 1,325.36 at 11 a.m. in New York. Treasury securities dropped, pushing the yield on the benchmark 10-Year Treasury note up to 3.53% from 3.47% late yesterday.
Employment Forecast
Payrolls rose by 195,000 workers in February, the biggest advance since May, after a 36,000 gain the previous month, according to the median forecast of economists surveyed before a Labor Department report tomorrow. The acceleration in hiring reflects a pickup in growth and a rebound from the weather- depressed January level, economists said.
The comfort reading for week ended February 20 was the highest since April 2008.
The comfort index of personal finances rose to 2.4 last week, the highest since May 2009, from minus 2.3. Fifty-one percent of those polled held positive views on their financial situation, up from 49% the previous week and the first time since January 2010 that the reading topped 50%.
A gauge of Americans' views of the economy fell to minus 70.6 last week from minus 69.4. The share of households with a positive view of the economy held at 15% for a second week, matching the highest since September 2008.