Confidence among U.S. consumers rose in September from the lowest level since November 2008 as Americans’ views of current economic conditions improved.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 57.8 this month from 55.7 in August. The median estimate of economists surveyed by Bloomberg News called for a reading of 57. The group’s measure of consumer expectations six months from now dropped to the lowest level since May 1980.
A lack of job and income growth, higher costs and a volatile stock market help explain why retailers like Best Buy Co. are struggling to drum up sales. These headwinds for consumer spending, which accounts for 70 percent of the economy, raise the risk the recovery will falter and put pressure on President Barack Obama, lawmakers and the Federal Reserve to consider more measures aimed at boosting growth.
“The freefall is over,” said Jim O’Sullivan, chief economist at MF Global Inc. in New York, who projected the sentiment gauge would climb to 58. “Consumer spending looks pretty sluggish, but it’s not seeing the recession-like weakness shown by the confidence numbers.”
Estimates of the 67 economists surveyed by Bloomberg for the confidence measure ranged from 52 to 60. The index averaged 89 in the five years leading up to the recession that began in December 2007 and ended in June 2009.
Stocks gained for a fifth day, the longest rally since July for the Standard & Poor’s 500 Index, amid optimism European leaders will make progress controlling the region’s debt crisis. The S&P 500 climbed 0.6 percent to 1,216.01 at the 4 p.m. close in New York.
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