U.S. consumer confidence hits 8-month high
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," affirmed 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.