Report: Americans feel more confident in economy

ANNE D’INNOCENZIO,AP Busi­ness Writers

CHRISTOPHER S. RUGABER,AP Busi­ness Writers

WASHINGTON (AP) — Amer­i­cans are more con­fi­dent in the econ­omy than they have been in seven months, an encour­ag­ing sign for Pres­i­dent Barack Obama with six weeks left in the pres­i­den­tial race.

A new sur­vey of con­sumer con­fi­dence rose Tues­day to its high­est level since Feb­ru­ary on expec­ta­tions that hir­ing will soon pick up. And a sep­a­rate report showed home val­ues ris­ing steadily, sig­nal­ing sus­tained improve­ment in housing.

“This is like an opin­ion poll on the econ­omy with­out the polit­i­cal par­ties attached,” said John Ryd­ing, chief econ­o­mist at RDQ Eco­nom­ics, a con­sult­ing firm. The con­fi­dence sur­vey “says peo­ple are feel­ing bet­ter. If so, they are less likely to vote for change.”

The Con­fer­ence Board’s index of con­sumer con­fi­dence shot up in Sep­tem­ber. The jump sur­prised many econ­o­mists because the most recent hir­ing and retail sales fig­ures have been sluggish.

The increased con­fi­dence could help explain recent polls that show Obama with a widen­ing lead over Mitt Rom­ney in some bat­tle­ground states.

The con­sumer con­fi­dence index is closely watched because con­sumer spend­ing dri­ves nearly 70 per­cent of eco­nomic activ­ity. The index jumped from 61.3 for August to 70.3 for Sep­tem­ber. It remains well below 90, the level that is thought to sig­nify a healthy economy.

Among those feel­ing more opti­mistic about the econ­omy is Dar­lene John­son of Sil­ver Spring, Md., who works for the National Insti­tutes of Health. The value of Johnson’s 401(k) account has risen. Home sales in her neigh­bor­hood have ticked up, too, and are com­mand­ing higher prices.

“I feel like things are sta­bi­liz­ing,” she said. “I don’t feel as uneasy as I did a few months ago.”

But John­son, who voted for Obama in 2008, remains unde­cided on which can­di­date to back. And she’s still a bit ner­vous about the future.

“It will depend on how my pock­ets are look­ing,” she says. “Every­day cir­cum­stances will drive my deci­sion on how I am going to vote.”

Econ­o­mists point to some key rea­sons why con­sumers have grown more confident.

Stocks are up: The Stan­dard & Poor’s 500 stock index has surged nearly 15 per­cent this year. Gas prices have lev­eled off after ris­ing for sev­eral months. And the 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.

National home prices rose 1.2 per­cent in July com­pared with a year ago, accord­ing to the Stan­dard & Poor’s/Case-Shiller index released Tues­day. That was the sec­ond straight month in which year-over-year home prices have increased.

Some econ­o­mists ques­tion whether the higher level of con­fi­dence is sus­tain­able. They’ve seen the index spike briefly before since the Great Reces­sion ended more than three years ago. Some say con­fi­dence could be affected by neg­a­tive cam­paign ads that focus on the economy.

But oth­ers note that even a weak econ­omy doesn’t feel so bad to many con­sumers once it begins to make steady improvement.

“The econ­omy is per­ceived in rel­a­tive rather than absolute terms,” noted St. Louis Uni­ver­sity polit­i­cal sci­en­tist and poll­ster Ken Warren.

Mark Vit­ner, a senior econ­o­mist at Wells Fargo, sug­gests that for­mer Pres­i­dent Bill Clin­ton might have helped boost con­fi­dence with his rous­ing speech on Obama’s behalf at the Demo­c­ra­tic National Con­ven­tion in early Sep­tem­ber. The Con­fer­ence Board’s con­sumer con­fi­dence sur­vey was con­ducted Sept. 1–13.

Clin­ton “rekin­dled mem­o­ries of bet­ter eco­nomic times” and assured vot­ers that the U.S. econ­omy was on the right track, Vit­ner said.

The con­sumer con­fi­dence sur­vey polled 500 peo­ple. The part of the sur­vey that gauges con­sumers’ con­fi­dence in the econ­omy now and the part that gauges their out­look for the next six months both rose. Con­sumers were much more opti­mistic about the short-term out­look for busi­ness con­di­tions, employ­ment and their finan­cial situation.

The ris­ing home prices could also help Obama’s prospects. Prices are ris­ing in many large cities in swing states such as Florida, Col­orado, Michi­gan and North Car­olina. Prices have risen 3.6 per­cent in Tampa, Fla., in the past year, for exam­ple. And they’re up 5.4 per­cent in Den­ver, 6.2 per­cent in Detroit and 2.2 per­cent in Char­lotte, N.C.

A Wash­ing­ton Post poll out Tues­day showed Obama lead­ing Rom­ney among likely vot­ers in Ohio, 52 to 44 per­cent. The pres­i­dent also had a slight edge in Florida, 51 to 47 per­cent among those most likely to vote.

Obama is also gain­ing the upper hand on which can­di­date is bet­ter able to han­dle the econ­omy. Reg­is­tered vot­ers in Ohio pre­ferred Obama on the econ­omy by 50 per­cent to 43 per­cent, and in Florida by 49 per­cent to 45 percent.

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D’Innocenzio con­tributed from New York. Asso­ci­ated Press Writer Jim Kuhn­henn in Wash­ing­ton con­tributed to this report.

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