US Consumer Confidence at 2-Year High
US consumer optimism reached its highest level since the onset of the Great Recession this month, according to a report from the Conference Board, issued Tuesday. The group’s index of consumer confidence surged from a 74.3 reading in May to 81.4 this month, mirroring the other major consumer confidence gauge from Thomson Reuters and the University of Michigan. Released earlier this month, that index came in at a five-year high, though the group’s preliminary reading for June is down a bit. Both gauges surprised analysts, who had projected only a small increase in consumer confidence this month. The 81.4 reading in Conference Board’s index was its highest since January 2008.
Consumer confidence is monitored closely by leading economists as consumer spending accounts for about three fourths of the total US gross domestic product. Consumer spending increased at its fastest pace in two years during the first quarter, driving overall economic growth up to 2.4 percent during the January to March period. Spending appears to have dropped slightly in April, according to several reports, but rebounded in May. A comprehensive report on May retail sales is due to be released Thursday by the Commerce Department.
The Conference Board’s report shows improvement in Americans’ attitudes about current economic conditions as well as their expectations for the economy and the job market over the next six months. For example, the index showed that 19.6 percent of respondents expect the job market to improve over the second half of the year, whereas only 16.3 percent had that expectation in May. US employers have added an average of 175,000 jobs per month over the past year, sufficient to lower the unemployment rate over time, according to economists. The national jobless rate ticked up to 7.6 percent last month, but is down 0.6 percentage points over the past twelve months.