US consumer sentiment index reaches 7-year high
WASHINGTON (AP) — U.S. consumers expect better economic growth and rising incomes in the coming months, pushing a measure of confidence to a seven-year high in October.
The University of Michigan said Friday that its index of consumer sentiment rose to 86.9 from 84.6 in September. That's the highest since July 2007, five months before the Great Recession began. Still, the index regularly topped 90 before the downturn.
The solid increase suggests consumers largely dismissed concerns about slowing global growth and have ignored the sharp swings in financial markets earlier this month. Instead, greater hiring and lower gas prices are boosting their outlook.
"Market volatility, geopolitical tensions, and worries about the global economy weren't able to sour consumers' moods this month," said Greg Daco, an economist at Oxford Economics.
Richard Curtin, the survey's chief economist, says that almost six in ten of the respondents said the economy has improved recently, the highest proportion in more than 10 years.
The measure is the second this week to show consumer confidence has reached the highest level since the recession. Greater confidence and more hiring could lead to faster spending and healthier economic growth.
On Tuesday, the Conference Board's consumer confidence index rose to its highest level since October 2007, mostly because of steady job gains. Employers have added an average of 227,000 jobs a month this year, up from 194,000 in 2013.
Still, the gains in confidence haven't yet led to higher spending. Consumer spending actually slipped 0.2 percent in September, according to government data also released Friday. And it rose only 1.8 percent in the July-September quarter, a sluggish reading. A big gain in exports and government spending caused the economy to grow 3.5 percent, however, a solid increase.
Despite September's showing, economists are still optimistic that stronger job growth and lower gasoline prices will boost spending in the holiday season. That, in turn, should keep growth steady in the October-December quarter.