May 25 - U.S. consumer sentiment jumped to the highest since October 2007 as consumers bet the job market will improve and wages will rise enough to offset higher prices. Conway G. Gittens reports.
PLEASE NOTE: THIS EDIT CONTAINS CONVERTED 4:3 MATERIAL Consumer sentiment rose to a more than four-year high in May, according to the Thomson Reuters/University of Michigan survey. Shoppers remain upbeat about the labor market despite two months of subpar job growth, while high-end consumers expect to see bigger wage increases. Robert Johnson, an economist for Morningstar, says consumers are right to be feeling better. SOUNDBITE: ROBERT JOHNSON, DIRECTOR OF ECONOMIC ANALYSIS, MORNINGSTAR (ENGLISH) SAYING: "One of the problems of this recovery has been a relatively slow growth in what they call personal income, the wage portion of the number has been relatively good, which is supportive and the other thing that is happening now is inflation has come back in a little bit, and so those wage increases will go further." According to data from the Labor Department, Americans earned close to 2 percent more over the 12-month period ended in April, while consumer prices were up just over 2 percent during the same time. To put in plainly: consumer moods brighten when a little bit more in their paycheck is not threatened by $4, $5 gasoline. Those happy feelings could change if job growth, no matter how tepid, turns to job losses. SOUNDBITE: ROBERT JOHNSON, DIRECTOR OF ECONOMIC ANALYSIS, MORNINGSTAR (ENGLISH) SAYING: "I really think it would take a full negative number to do it. In other words instead of gaining a 100,000 or 200,000 jobs we typically gain in a month, if we went to minus a 100,000 then kind of all bets are off, that would kind of spook the consumer." But for now consumers think the labor market will improve and according to the survey more are willing to spend, even for big ticket items. Conway Gittens, Reuters