Consumer confidence held near a seven-month high last week, showing holiday shopping lists are outweighing Americans’ fiscal cliff concerns and keeping them in a mood to spend.
The Bloomberg Consumer Comfort Index stood at minus 33.8 in the period ended Dec. 2 and was minus 33 the prior week. The reading, within the margin of error of 3 percentage points, was the 11th straight above minus 40, the level associated with recessions and their aftermath.
Consumers’ optimism continued to build in the buying climate gauge of the index, which improved to minus 33.4, the strongest since November 2007, from minus 35.4 the previous week. Still, the gains are threatened as lawmakers fail to resolve the impending fiscal cliff that could automatically raise taxes and cut spending in January.
“The overall improvement in the buying index bodes well for the initial portion of the traditional holiday shopping season,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “The risk is when wage earners are informed by employers that their after-tax income may decline due to scheduled changes in U.S. federal tax policy next year, which indicates the consumer may pull back ahead of the critical final week before Christmas.”