Consumer confidence is taking offDate posted: 2/18/14 06:30:00 AM
With an improved outlook for hiring and growth, consumer confidence surged across the nation in December, reflecting signs that spending could increase throughout 2014.
"We're ending 2013 with good momentum," Stephen Stanley, Pierpont Securities' chief economist, told Bloomberg. "We've seen progress in the labor market. The rise in home values along with the run-up in equity prices is a big element of why people are feeling better."
For the past two years, Stanley's company, Pierpont, has been the second-best forecaster of consumer confidence, according to Bloomberg.
Marking the biggest employment gain in eight years, 2013 also came through with an improved housing market and record stock values, which will help support spending in the new year after boosting household wealth. Bloomberg reported that companies from Apple to Ford are pledging to expand operations in the U.S. as demand continues to improve, which might be the best sign for the nation's economy in 2014.
Automakers sold at a 16.3 million annualized rate in November, which was the highest since May 2007, according to data from Ward's Automotive Group.
"The upbeat consumer mood bodes well for spending in 2014," Senior Economist Michael Dolega of TD Economics told the Associated Press.
Rising confidence level
The Conference Board recently reported that its index of consumer confidence climbed from 72 in November to 78.1 in December. While November's figure was revised up from 70.4, December signals the first month of increase after three months of decline.
"Despite the many challenges throughout 2013, consumers are in better spirits today than when the year began," said Lynn Franco, the Conference Board's director of economic indicators, according to Bloomberg.
Willing to spend more money
The confidence report implies that Americans are willing to spend more on large purchases, according to the AP. More Americans are planning on buying a home and a major appliance in the next six months, and Dolega said that is "very encouraging, leaving us hopeful that gradually rising interest rates will not derail the housing recovery."
The number of Americans planning to purchase a home in the next six months increased to the highest level since July, while the percentage also increased from November to December for Americans planning to buy a major household appliance.
"There's certainly room for home prices to continue rising in the coming year," Dana Saporta, an economist at Credit Suisse, told Bloomberg. "As home prices continue to rise, more and more homeowners who are underwater on their mortgages will see their financial situations improving. Just getting out of that underwater position should be a big help to the economy."
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