Consumers give US economy a lift before election

Several US reports unveiled Thursday found consumers confident enough to spend more, which has aided the economy. Key umemployment data for October are expected Friday.
Matt Rourke/Associated Press
Several US reports unveiled Thursday found consumers confident enough to spend more, which has aided the economy. Key umemployment data for October are expected Friday.

WASHINGTON — A flurry of data issued Thursday sketched a brightening view of the US economy in the final days before a presidential election that will pivot on the strength of the recovery.

Cheaper gas, rising home prices, and lower unemployment have given consumers the confidence to spend more. And retailers, auto dealers, and manufacturers are benefiting.

At the same time, many employers remain anxious, which is why only modest hiring gains are forecast for Friday’s jobs report for October. It will be the last major report on the economy before Election Day.


Economists think the jobs report will show the unemployment rate rose to 7.9 percent in October, from 7.8 percent in September. Coming so close to the election, though, the most recent economic figures aren’t expected to alter the outcome. Few voters are thought to still be undecided.

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‘‘People have given this a lot of thought,’’ said Andrew Kohut, president of the Pew Research Center. ‘‘One report, unless it is a real shocker, is unlikely to affect their view of whether Obama has done a good job with the economy or if Romney would do a better job.’’

Here is what the reports issued Thursday showed about the US economy:

 Consumers: Americans have taken heart from recent declines in the unemployment rate. They appear increasingly confident the economy can sustain its modest recovery. That’s translating into more consumer spending — the fuel of economic growth — though businesses have pulled back and exports have slowed.

Consumer confidence jumped last month. The Conference Board index of confidence reached 72.2, its highest since February 2008, two months into the Great Recession.


The index is still below the level of 90 that’s consistent with a healthy economy. But it’s up from 40.9 a year ago — the sharpest one-year increase since 1994, according to Robert Kavcic, an economist at BMO Capital Markets. And the index is far above its all-time low of 25.3 in February 2009, in the midst of the financial crisis.

Consumers are also spending more at retail stores, a separate report showed Thursday. Sales in stores open at least a year rose 5 percent in October, according to a tally from 21 retail chains by the International Council of Shopping Centers. Some of the increase, though, might reflect higher spending for generators, batteries, water and other supplies in preparation for Superstorm Sandy.

 Jobs: Job growth will probably remain modest. Most companies are reluctant to make major investments in hiring or equipment, economists say.

Economists have forecast that employers added 121,000 jobs last month — too few to drive down the unemployment rate quickly. The rate has declined in recent months in part because some people have given up looking for work.

Applications for unemployment benefits fell 9,000 to 363,000 last week, the Labor Department said Thursday. That suggests hiring is unlikely to rise from its current pace of about 150,000 jobs a month.


The US economy expanded at a 2 percent annual pace in the July-September quarter, up from 1.3 percent in the second quarter. Most economists expect growth may slow a bit in the fourth quarter, partly because of disruptions from Hurricane Sandy.

Still, even at 2 percent annual growth, the economy is growing too slowly to bring rapid relief to roughly 12 million out-of-work Americans. With the unemployment rate still high, steady growth of more than 3 percent is generally needed to reduce it.

 Auto sales: Auto companies reported steady sales gains last month despite losing three days of business to the storm in heavily populated areas of the Northeast. Toyota said its sales rose nearly 16 percent for the month. Volkswagen reported a 22 percent jump. Honda’s sales gained 8.8 percent. Chrysler’s sales rose 10 percent, General Motors’ 5 percent, and Ford’s less than 1 percent.

 Manufacturing: Steady consumer spending is supporting gains in US factory production, even though US businesses and those overseas have reduced their demand for high-cost manufactured goods.