Business and Finance news

Confidence among U.S. consumers probably gained in May for a third straight month and business activity shrank the least since September, analysts said before reports today.

The Reuters/University of Michigan final index of consumer sentiment climbed to 68, the highest in eight months, according to the median estimate of 52 economists in a Bloomberg News survey. Separately, the Institute for Supply Management-Chicago Inc. may say its business barometer increased to 42 this month from 40.1 in April. Readings below 50 signal contraction.

Rising confidence limits the risk that consumer spending, the biggest part of the economy, will peter out after a rebound in the first quarter. Still, unemployment, already at a 25-year high, is forecast to keep climbing and home foreclosures are at a record, indicating a recovery will be slow to emerge.

“Consumers’ anxiety levels have abated as there’s a broad consensus that the worst is probably behind us,” said John Herrmann, chief economist at Herrmann Forecasting in Summit, New Jersey. “The consumer holds the key to where we go from here.”

The confidence report is due at 10 a.m. Washington time. Forecasts in the survey ranged from 67 to 71, after a reading of 65.1 in April and a preliminary May reading of 67.9.

The Institute for Supply Management-Chicago’s report is due at 9:45 a.m. Economists’ forecasts ranged from 34.2 to 45, according to the Bloomberg survey.

Stocks, Treasuries

Stocks have surged and Treasuries have dropped amid signs the worst of the economy’s decline may have passed. The Standard & Poor’s 500 Index has gained 34 percent since March 9, when it hit the lowest level in more than 12 years, closing at 906 easy payday loans.83 yesterday in New York. Yields on the benchmark 10-year note climbed to 3.64 percent this week from 2.86 percent that day.

Data from the Commerce Department at 8:30 a.m. may show gross domestic product shrank at a 5.5 percent annual rate from January through March, compared with an initial 6.1 percent estimate. The world’s largest economy shrank at a 6.3 percent annual rate in the last three months of 2008.

Consumers are getting a boost from stocks and also because gasoline costs are down nearly 50 percent from July highs and mortgage rates are near historic lows, trimming borrowing costs for homeowners.

At the same time, household wealth is being eroded by lower property values, and the economy has lost 5.7 million jobs since the recession began in December 2007. Economists predict the unemployment rate, at 8.9 percent in April, may average 9.6 percent next year.

Auto Industry

Automakers’ woes may cause more plant closures, production cuts and job losses. General Motors Corp., the world’s largest automaker until its 77-year reign ended in 2008, may file for bankruptcy protection on June 1, people familiar with the matter said yesterday. Chrysler LLC filed for bankruptcy on April 30.

Some executives have expressed optimism. Global capital markets have improved “dramatically,” General Electric Co. Chief Executive Officer Jeffrey Immelt said this week.

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