Ahead of the Bell: US consumer confidence
WASHINGTON (AP) — A measure of Americans' confidence in the economy likely rose for a second straight month on expectations that business conditions will improve and hiring will pick up.
Economists forecast that the Conference Board, a private research group, will report that its monthly consumer confidence index rose to 72 in October from 70.3 in September, according to a survey by FactSet.
The September reading was the highest since February. That's when employers added 259,000 jobs and the economic recovery was thought to be strengthening.
The confidence index is widely watched because consumer spending drives about 70 percent of the U.S. economy.
A separate survey issued Friday by the University of Michigan showed that U.S. consumer confidence rose in October to the highest level since September 2007. That was three months before the Great Recession began.
The Conference Board is to issue its report at 10 a.m. Eastern time Thursday. The report had been scheduled for release earlier this week but was delayed because of Superstorm Sandy.
A further gain in consumer confidence could be an encouraging sign for President Barack Obama, who faces re-election Tuesday at a time when the economy is the top issue for most voters.
In September, the survey showed that consumers were more optimistic about the availability of jobs and the outlook for hiring over the next six months.
The government's employment report for September, issued Oct. 5, showed that employers added a modest 114,000 jobs. But it also showed that job growth in July and August was stronger than first thought.
Economists note some key reasons why consumers have grown more confident. They say higher stock prices and the early stages of a recovery in the housing market have helped boost optimism.
The Standard & Poor's 500 stock index has surged 12 percent this year. Gasoline prices have leveled off after rising for several months.
And a broad increase in home prices is likely giving would-be buyers more confidence. When prices rise, buyers don't worry so much that a home might lose value after they bought it.
Some economists question whether the higher level of confidence is sustainable. But others note that even a weak economy doesn't feel so bad to many consumers once it begins to make steady improvement.
Consumers' confidence might have been rattled by this week's Superstorm Sandy. Disruptions across U.S. industries will slow the economy temporarily, and some stores and restaurants will draw fewer customers. Some of those losses won't be made up.
The consumer confidence index has fluctuated sharply this year. It's fallen five times in the past nine months, hitting a low for the year of 61.3 in August before rising in September.
The index remains well below the reading of 90 that indicates a healthy economy — a level it hasn't touched since the Great Recession began in December 2007. But it's far above the all-time low of 25.3 touched in February 2009.