U.S. consumer sentiment jumps ahead of elections
by By Edward Krudy

Reuters    Translate This Article
12 October 2012

NEW YORK, Oct 12 (Reuters) - U.S. consumer sentiment unexpectedly rose to its highest in five years in October in the latest in a string of encouraging signs from the economy that may boost President Barack Obama's re-election hopes next month.

The Thomson Reuters/University of Michigan's preliminary October reading on the overall index on consumer sentiment came in at 83.1, up from 78.3 the month before, and the highest since September 2007, the survey showed on Friday.

The new buoyancy among consumers comes shortly after the U.S. unemployment rate tumbled to its lowest in nearly four years in September as more people returned to the workforce and found jobs than economists had predicted.

'We are getting some quite interesting signals from consumer sentiment and employment data—both (the) unemployment rate and initial claims—that there has been some quite significant improvement in the economy,' said David Sloan, an economist at 4Cast in New York.

Economic issues have been a battleground in the election campaign as Obama seeks to burnish his credentials as a competent manager of the economy while Republican challenger Mitt Romney has faulted Obama's record on job creation and growth. Friday's sentiment report was the last before the November 6 general election and will be welcomed by Democrats.

'That kind of boost in consumer sentiment benefits an incumbent without question,' said Julia Clark, a pollster with Ipsos in Washington. 'The challenge that the Republicans have is continuing to attack the government's credibility on this issue while we actually are seeing data that suggest that consumer sentiment is improving.'

The sentiment reading was well above the median forecast for a slight decline to 78 among economists polled by Reuters as consumers felt better about the economy overall.

U.S. stocks were higher after the news but turned lower by midday as equities struggle to make headway after recently climbing to highs not seen in five years. The S&P 500 was down 0.4 percent in afternoon trade.

October's unexpected jump in sentiment came as consumers felt better about the economy in both the long and the short term, the compilers of the Thomson Reuters/University of Michigan survey said.

'What changed was how they (consumers) evaluated economic conditions,' survey director Richard Curtin said in a statement. 'Economic conditions during the year ahead were expected to be 'good' by more consumers, and more consumers expected 'good' economic times over the next five years.'

The survey's gauge of consumer expectations jumped to 79.5 from 73.5, well above an expected reading of 74. Expectations were at their highest since July 2007.

The survey's barometer of current economic conditions rose to 88.6 from 85.7 and was above a forecast of 86.

As well as September's employment report there have been a number of other encouraging indications from the economy, including stabilizing house prices, and last month's expansionary reading for the U.S. manufacturing sector after three months of contraction.

Also on Friday, The Economic Cycle Research Institute, a New York-based independent forecasting group, said its measure of future U.S. economic expansion pushed higher last week, while the annualized growth rate rose to its loftiest in more than a year.

The institute said its Weekly Leading Index increased to 127.7 last week from a revised 126.2 the previous week. The index's annualized growth rate accelerated to its highest level since May 2011 at 5.7 percent from 4.6 percent.

In another positive sign for the housing sector, both JPMorgan Chase (JPM.N) and Wells Fargo (WFC.N) posted record profit on Friday as a recovery in the housing market this year boosted mortgage lending at both banks.

'We believe the housing market has turned the corner,' JPMorgan Chief Executive Jamie Dimon said in a statement.

Shares in both JP Morgan and Wells Fargo were lower by midday, however, with investors apparently focusing on a shortfall in Wells Fargo's revenue compared to analysts' forecasts.

But the trajectory of the U.S. economy is still uncertain. Much of Europe is mired in recession and the Chinese economy has slowed. A recent Reuters poll found that while economists have stopped cutting their U.S. growth outlook as aggressively as in recent months, they still see just 2.1 percent growth this year and only 2 percent next year.

A separate report showed U.S. producer prices rose more than expected in September as the cost of gasoline surged, but underlying inflation pressures were muted in a sign the Federal Reserve has room to carry out its new monetary stimulus program.

'If you take out food and energy you are essentially looking at a number that didn't go anywhere and was actually probably a little weaker than expected,' said Cary Leahey, an economist at Decision Economics in New York.

'These kinds of energy prices are debilitating to the economy and it is one of the reasons why we haven't been able to get any kind of a glide speed above a 2 percent annual (growth) rate.'

The Labor Department said on Friday its seasonally adjusted Producer Price Index increased 1.1 percent last month. Economists polled by Reuters had expected prices at farms, factories and refineries to rise 0.7 percent after climbing 1.7 percent in August.

The Labor Department's report chimed with the sentiment survey that showed consumers' one-year inflation expectations fell to 3.1 percent from 3.3 percent, while the survey's five-to-10-year inflation outlook hit its lowest since March 2009, falling to 2.6 percent from 2.8 percent.

(Additional reporting by Chris Reese; Editing by Neil Stempleman)

© Copyright 2012 Reuters

Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. 'Reuters' and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies. For additional information on other Reuters media services please visit reuters.com/newsagency .

Every day Global Good News documents the rise of a better quality of life dawning in the world from good news reported by the press; and highlights the need for introducing Natural Law based—Total Knowledge based—programmes to bring the support of Nature to every individual, raise the quality of life of every society, and create a lasting state of world peace.



Translation software is not perfect; however if you would like to try it, you can translate this page using:

(Google) Select a language English to Afrikaans English to Albanian English to Arabic English to Belarusian English to Bulgarian English to Catalan English to Chinese (Simplified) English to Chinese (Traditional) English to Croatian English to Czech English to Danish English to Dutch English to Estonian English to Filipino English to Finnish English to French English to Galician English to German English to Greek English to Hebrew English to Hindi English to Hungarian English to Icelandic English to Indonesian English to Irish English to Italian English to Japanese English to Korean English to Latvian English to Lithuanian English to Macedonian English to Malay English to Maltese English to Norwegian English to Persian English to Polish English to Portuguese English to Romanian English to Russian English to Serbian English to Slovak English to Slovenian English to Spanish English to Swahili English to Swedish English to Thai English to Turkish English to Ukrainian English to Vietnamese English to Welsh English to Yiddish

(Altavista babelfish) Select a languageEnglish to Chinese-simpEnglish to Chinese-tradEnglish to DutchEnglish to PortugueseEnglish to FrenchEnglish to GermanEnglish to GreekEnglish to ItalianEnglish to JapaneseEnglish to KoreanEnglish to RussianEnglish to Spanish

Send Good News to Global Good News.

Your comments.