Consumer confidence reached its highest levels in eight months
in February as an improvement in the labor market and encouraging
economic reports lifted Americans' confidence in a sustained
The Thomas Reuters/ University of Michigan preliminary index of
consumer sentiment for February increased from 74.2 in January to
75.1; that figure is in line with a median forecast of economists
polled by Bloomberg News. Moreover, the sentiment figures
illustrate that households' views of the economy and labor market
turned positive for the first time in seven years.
Analysts contend the uptick in consumer confidence could translate
into increased consumer spending, a vital component of GDP in the
U.S. "At the end of the day, people spend on how they feel about
their job prospects, and additional gains in confidence are likely
to provide further support for spending,"
Millan Mulraine, the senior strategist at TD Securities.
Among affluent Americans - defined by the survey as those making
more than $75,000 a year - confidence climbed to its highest levels
since the recession began in December 2007. With the U.S.
unemployment rate falling 0.8 percentage points since November -
the biggest two-month drop since 1958 - Americans are readjusting
their "current view and future prospects for the labor market," a
Credit Suisse report concluded.
The U.S. Commerce Department announced in January that household
purchases, which account for nearly 70 percent of GDP, increased at
a 4.4 percent annualized rate in the fourth quarter of 2010, the
fastest rise since the first three months of 2006.