Confidence index up sharply in November

Shoppers at a J.C. Penney store in Las Vegas dig through a pile of sweaters on Black Friday. Consumer confidence climbed to a four-year high this month, the Conference Board reported Tuesday.
Shoppers at a J.C. Penney store in Las Vegas dig through a pile of sweaters on Black Friday. Consumer confidence climbed to a four-year high this month, the Conference Board reported Tuesday.

— Consumer confidence climbed to a four-year high in November and demand for business equipment rose, signaling resilience in the U.S. economy as the new year approaches, economists said.

The Conference Board’s confidence index increased to 73.7 in November from 73.1 the prior month, the New York-based group said Tuesday. Bookings for nondefense capital goods excluding aircraft rose 1.7 percent last month, the most since May, the Commerce Department reported.

“It’s good news starting out the fourth quarter,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Concern that the fiscal cliff is a major roadblock to the recovery doesn’t seem to be holding up,” he said, referring to automatic tax increases and spending cuts that will take effect in 2013 if another budget deal isn’t brokered in Washington.

Household finances and sentiment are getting a boost from a revival in the real-estate market, making it more likely that Americans will keep up the spending that accounts for 70 percent of the economy. At the same time, a rebound in business demand for machinery indicates that some companies were undeterred by the fiscal cliff threat.

The Conference Board’s confidence index was forecast to slip to 73.0, according to the median estimate in a Bloomberg survey of 75 economists. The measure averaged 53.7 during the recession that ended in June 2009. It must reach 90 to indicate a healthy economy.

Consumers are benefiting as record-low mortgage rates drive a recovery in housing. Sales of previously owned homes unexpectedly rose in October, according to the National Association of Realtors.

The Conference Board’s report showed the share of Americans planning to buy a house rose to a record high, indicating a job-market recovery is making households more willing to make longterm commitments.

Among consumers who are more upbeat is Darshan Sampathu, 33, who works for an advertising agency in Boston.

“I feel like there is less risk these days, I’m not as worried about my job as much,” Sampathu said. “So I’m a little bit more confident about buying things like electronics and things I’ve been holding off buying the last few years.”

Thanksgiving Day openings and midnight deals at chains from Target Corp. to Wal-Mart Stores Inc. drew shoppers. Spending in stores and online rose 13 percent to $59.1 billion in the four days starting Nov. 22, the National Retail Federation reported. A year ago, sales advanced 16 percent over the holiday weekend.

The percent of respondents in the Conference Board survey expecting more jobs to become available in the next six months increased to 20.3, the highest since February 2011, from 19.7 the previous month.

The share planning to buy a house within the next six months jumped to 6.9 percent, the most in data going back to 1964. The previous all-time high was 5.5 percent.

Tuesday’s durable goods report from the Commerce Department showed business investment may begin to rebound after companies held back on concern the fiscal cliff might throw the economy into a recession next year.

Demand for capital goods excluding defense equipment and aircraft, including items such as computers, engines and communications gear, climbed 1.7 percent after a revised 0.4 percent drop in September that was larger than previously forecast.

Orders for all durable goods were little changed, beating the median forecast of economists surveyed by Bloomberg that projected a 0.7 percent drop.

Cleveland-based Eaton Corp. is among companies saying customers are trying to find ways to meet rising demand even as they are concerned about the $607 billion in tax increases and spending cuts that may take effect next year if lawmakers don’t act.

“We’re seeing short-term lease activity at a very high level,” Chief Executive Officer Alexander Cutler said at a Nov. 13 conference, indicating companies would rather pay more for the flexibility that renting equipment provides in the short-term than commit to taking on a large purchase over the long run. “People are paying a premium at this point to really deal with the uncertainty,” he said.

Business, Pages 25 on 11/28/2012

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