Consumer confidence rose more than forecast in November, reaching a seven-year high and indicating Americans will be in the mood to step up holiday spending.
The Thomson Reuters/University of Michigan preliminary sentiment index increased to 89.4, exceeding the highest estimate in a Bloomberg survey and the strongest since July 2007, from a final reading of 86.9 in October. The median projection called for a gain to 87.5.
A stronger labor market, cheaper fuel costs, and near-record stock prices are brightening consumers’ spirits as the busiest time of the year for retailers gets underway. Bigger wage gains would probably drive sentiment and boost household spending, which accounts for almost 70 percent of the economy.
“Retailers should expect a good holiday season ahead,” said Brian Jones, senior U.S. economist in New York at Societe Generale, whose sentiment projection of 89 matched the highest in the Bloomberg survey. “Gasoline prices are going down. You’ve given every American a tax cut going into the holidays.”
The increase in confidence this month follows a rebound in retail sales in October. Purchases rose 0.3 percent as 11 of 13 major categories showed gains, indicating broad-based growth, figures from the Commerce Department showed Friday.
Employment on track for the best year in 15 is helping to underpin Americans’ spirits. Employers have added an average 228,500 workers a month to payrolls so far this year, the strongest pace since 1999.
