A better hiring outlook and lower gasoline prices have combined to push a measure of US consumer confidence to its highest level in four-and-a-half years.
The Thomson Reuters/University of Michigan index of consumer sentiment jumped to 79.3 last month, up from 76.4 in the previous month. That marks the best reading since October 2007 — two months before the recession began.
A high proportion of consumers say they are hearing about job gains rather than losses, with the number of those who say they heard of job losses dropping to its lowest point since mid-2007.
Gasoline prices have also fallen steadily in recent weeks, freeing up more money for other purchases. The average gasoline price on Friday was US$3.67 per gallon (nearly US$1 per liter) nationwide, according to the American Automobile Association. That is a reduction of US$0.17 in the past month.
US consumers appear to be more focused on the US -economy than on Europe’s financial crisis, which has weighed heavily on stocks throughout this month. The Dow Jones Industrial Average dropped another 75 points on Friday to close at 12,455. The Dow has fallen 824 points this month since hitting a four-year high of 13,279 on May 1.
The survey found that “only a few consumers even mentioned” Europe.
The percentage of consumers who said it is a good time to buy an appliance or other long--lasting household goods reached the highest point in a year.
Fears about rising prices are also abating, likely because of falling gasoline costs. Consumers expect lower levels of inflation in the months and years ahead, the survey found.
“This is a good report,” Yinbin Lei, an economist at IHS Global Insight, said in a note to clients. “Consumer mood is slowly coming out of the ditch.”
Still, consumers face plenty of challenges, Lei added, such as weak wage growth, rising student loan debt and a poor housing market.