U.S. consumer sentiment remains high

WASHINGTON — A measure of U.S. consumer confidence remained near a six-year high in June as higher home prices boosted household wealth. The survey shows Americans are feeling better about the economy, despite wild gyrations in the stock market.

The University of Michigan said Friday that its final reading of consumer sentiment in June was 84.1. That’s an improvement from a preliminary reading of 82.7 issued on June 14. And it is just slightly below May’s final reading of 84.5, which was the highest since July 2007.

Rising household wealth was the main reason consumers stayed optimistic. Households with income above $75,000, those more likely to own homes and stocks, reported the biggest gain.

Consumers’ confidence is closely watched because their spending accounts for 70 percent of economic growth.

The University of Michigan polls roughly 500 people throughout the month and issues two readings.

The slight improvement from the preliminary survey suggests consumers were unfazed by Federal Reserve Chairman Ben Bernanke’s June 19 comments about the Fed’s bond purchases. Bernanke said the Fed could start to slow its bond buying by the end of the year and end it next year, if the economy continues to strengthen. The bond purchases have kept long-term interest rates low.

Stocks fell sharply in the days after Bernanke’s comments and interest rates jumped. The average rate on the 30-year fixed mortgage surged this week to a two-year high of 4.46 percent. That’s up from 3.93 percent last week and a full point higher than a month ago.

“Consumers remain optimistic despite recent market volatility and a back-up in mortgage rates,” said Yelena Shulyatyeva, an economist at BNP Paribas.

Americans seem to agree with the Fed’s view that the economy is slowly improving. A measure of their expectations for future growth rose to an eight-month high.

Employers have been adding jobs at stable pace, while the unemployment rate has slowly fallen to a still-high 7.6 percent. Higher home sales and prices have driven a steady housing recovery. And on Tuesday the Conference Board said the improved job market helped lift its survey of consumer confidence to the highest level in 5½ years, a point echoed by Friday’s Michigan consumer sentiment survey.

“Consumers now believe the recovery has achieved an upward momentum that will not be easily reversed,” Richard Curtin, director of the Michigan survey, said.

More Americans said they planned to buy a home, despite rising mortgage rates, according to the Michigan survey. The number of consumers who said it was a bad time to buy a home fell to the fewest in 10 years.

The survey also found that rising mortgage rates and home prices may be spurring more Americans to buy homes, rather than discouraging them. The proportion of Americans who said it is a good time to buy because rates and prices will be higher in the future reached post-recession highs this month.

More in Herald Business Journal

Tesla rolls out the design for its 500-mile electric big rig

The truck will have an Autopilot system, which can maintain a set speed and slow down in traffic.

How Airbus’s A380 deal with Emirates evaporated in Dubai

It came down to concern by Emirates that Airbus might shut down the jumbo program.

Trader Joe’s recalls packaged salads over contamination fear

Turkey cranberry salads sold in Idaho, Oregon or Washington are at risk.

Equipment rental and sales business H&E opens Mukilteo shop

Company hopes to capitalize on construction occuring in northwest Washington.

New Chick-fil-A draws dozens of campers in Bothell

A second restaurant of the popular chain is opening on Thursday.

Tulalip Resort Casino to feature locally grown hazelnuts

The resort wanted to put a focus on meals created with the nut.

Alderwood Water general manager named president of state association

Alderwood Water & Wastewater District General Manager Jeff Clarke has been installed… Continue reading

Boeing earns top marks for LGBTQ workplace policies

Boeing was one of 609 businesses nationwide to earn a 100-point score… Continue reading

Aerospace workers adjust to changing industry

The number of Boeing workers dropped almost 10 percent since last year

Most Read