Consumer sentiment rises for good reason
Increased retail, housing and auto spending, combined with recent jobs figures, show the economy gaining momentum heading into the holiday season.
Consumer sentiment rose to its highest level in five years on Friday and may have signaled something that will make economic skeptics spit at their screens and scrawl lengthy screeds into comments fields well after Election Day.
It's called a comeback.
The University of Michigan/Thompson Reuters (TRI) consumer sentiment index for October rose to 83.1, its highest level since September 2007. No one seemed more surprised than the folks at the University of Michigan and Reuters, who expected the index to top out at 78.5.
Combined with last week's jobs report from the Bureau of Labor Statistics, which reduced the unemployment rate from 8.1% to 7.8% and added 873,000 jobs to the rolls -- the highest tally in nine years -- the consumer sentiment result is a burst of positivity in an economy accustomed to the negative. It should also give conspiracy theorists plenty to chew on.
The retail business community not only embraces that consumer sentiment figure, but may have predicted it. Wal-Mart (WMT) is expecting a big boost this holiday season after U.S. layaway sales rose to $400 million in less than a month. That's about half the amount shoppers put on hold for all of 2011. The big-box retailer is also ordering twice as many Apple (AAPL) iPads for the holidays as last year and increasing expansion plans to 240 stories in fiscal 2014. It expects sales to rise by 5% to 7%.
That's even more rose-colored than the National Retail Federation's prediction that this year's holiday sales at its more than 9,000 member retailers will increase 4.1% to $586.1 billion. That's higher than the 10-year average holiday sales increase of 3.5% and follows last year's 4.6% increase.
Market research firm NPD Group backs up the NRF's talk with a survey that found 77% of Americans plan to spend as much or more this holiday season than they did last year. That's up from 73% of consumers who said the same before the 2011 holiday season, while the percentage of consumers who plan to spend less decreased from 27% last year to 23% this year.
It's all a bit optimistic, but then again so are many of the consumer spending indicators released recently. Existing home sales jumped 7.8% in August from the same time last year, while the national median home price has increased for six straight months to $187,000, according to the National Association of Realtors. That's 9.5% higher than it was during the same period in 2011 and supported by the S&P/Case-Shiller index of home values in 20 cities, which climbed 1.2% in July from the same time last year. That was the index's biggest 12-month jump since August 2010.
The new housing market's also showing signs of life. Building permits were up 24.5% in August from the same period in 2011 and new housing starts jumping 29.1% during the same span.
Americans are buying more cars to stick in those new driveways and garages, too. Auto sales increased 12.8% in September and are up 14.5% year-to-date from 2011, according to research from Autodata. All together, the auto industry is currently on pace to sell 14.94 million vehicles and hasn't been selling this strongly since March 2008.
Even the markets seem to like where this is going. The S&P 500 Index is up more than 13.9% for the year and reached its highest level since December 2007 in mid-September.
Some of the optimism above figures still falls a bit shy of pre-recession levels and is contingent on consumers actually coming through with some sales in the last quarter. When the Commerce Department last checked in on consumer spending in August, it was limping to a 0.1% gain following a 0.4% gain in July. But with consumer confidence and some telling sales numbers already at pre-recession levels, folks who hate good economic news are going to have a lot to stew over for the next few months.
Those darned "Chicago guys" got to the folks at UofM/Thompson-Reuters too!! Where is Jack Welch?
Consumer sentiment is rising becuase home prices have quit falling in most markets. The stock market has done even better, with the major indexes back to pre-crash levels. No one wants to make a major purchase when their biggest investments are under water.
With the country split nearly 50/50 it really won't matter who wins in November. Neither side will have enough votes to make any drastic changes. I'm not happy with either political party, but what really p*sses me off is watching corporations and billionaires spend obscene amounts of money to buy elections. The U.S. is well on its way toward becoming a plutocracy.
The reason for the unexpected rise in consumer confidence is people are now feeling Mitt Romney will be the President and the Fraud - Empty Chair will be in the unemployment line.
Here is one for everybody.
We had millions for SOLYNDRA and other solar companies "called winners" but we could not give 4 Amercian citizens serving our country abroad more security, even though we all knew of the unrest and even though they asked for it. I guess American citizens are "LOSERS". It is disgusting.
Typically democrat.... Obama is ARROGANT, Lazy, Corrupt and Stupid. His policies of Borrowing, Printing, Taxing and SPENDING will not bring about Prosperity. His support for big banks at the expense of the middle class will not end well.
He spend 860 Billion in stimulus. His 6 trillion in new debt is equivilent to 72,000 per family of four. Did your family recieve 72,000 from the government, or did you get the payment book. If you didn't get 72,000, you should be VOTING against Romney. Plain and Simple.
Obamanomics is going to be the death of the middle class. His Marxist policies are right out of Das Capital, including his extreme far left wing campiagn slogan, "Forward"...
America must decide if we want Socialism/Communism or Free Market Capitalism. One has made us the envy of the world, the other has eliminated the middle class and made everyone POOR, and then collapsed. CHOOSE WISELY!
The economy has turned around.Some people just arn`t smart enough to know it.With 31 straight
months of job growth if you don`t have a job,blame yourself.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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