confidence hits 2-month high**
By Associated Press
Friday, November 17, 2006 - Updated: 08:47 AM EST
WASHINGTON - Consumer confidence climbed to a two-month high as a good jobs climate, lower fuel bills and the outcome of the midterm elections brightened peoples’ feelings about the economy and their own financial fortunes.
The RBC Cash Index, based on the results of the international polling firm Ipsos, showed that confidence clocked in at 92.4 in November. That was up from 83.1 in October and marked the best showing since September, when confidence shot up to 93.7, a seven-month high.
For the most part, the economy is in decent shape even as it feels the strain of the housing slump.
The nation’s unemployment rate sank to a five-year low of 4.4 percent in October, the most recent figure available. And, as lower gasoline and other energy prices have helped to ease overall inflation pressures, workers’ paychecks are getting a boost.
Economists said all these factors helped to cheer consumers in November, but they also believe that last week’s elections played an important role. Voters, expressing their ire over the Iraq war, President Bush’s leadership and a scandal-scarred Congress, put Democrats in charge on Capitol Hill. The new Congress convenes in January.
“People were clearly cheered by the outcome of the election and that affected consumer sentiment. It is not all economics,” said Stuart Hoffman, chief economist at PNC Financial Services Group.
With consumers in better spirits, they may be in more of a mood to spend, economists said. That’s important to retailers gearing up for the holiday shopping season and to the national economy as well. Consumer spending is a major shaper of overall economic activity.
A measure tracking consumers’ sentiments about buying, saving and investment decisions rose to 92.1 in November. That was up from 87.2 in October and marked the highest reading since 110 in September, which was the second-best showing on record.
Economists said some of that improvement seen in November might be related to a string of recent record-high closes logged by the Dow Jones industrials, the stock market’s best-known indicator. Interest rates also have been stable, which may be another factor playing into the pickup. After two-plus years of hoisting interest rates, the Federal Reserve has held them steady since August. It is expected to stay on the sidelines into next year.
Consumers also felt better about current economic conditions, with this measure rising to 102.9 in November, compared with 98.3 in October.
The government reported Thursday that consumer prices fell for a second straight month in October, helped by a sharp drop in gasoline prices.
Lower inflation is good for Americans’ pocketbooks, allowing their paychecks to go further. Workers’ average weekly earnings, adjusted for inflation, grew by 3.2 percent in October compared to a year ago. That was the biggest annual gain in eight years and comes after a period of very sluggish wage growth.
“I think people are feeling very relieved that they are going to enjoy some of this income growth that has finally come through,” said T.J. Marta, a fixed-income strategist with RBC. continue]1 | 2 | Next »