WASHINGTON — The mood of U.S. consumers climbed to a five-year high in June, according to an index released Tuesday that showed expectations for the future climbing significantly.
The Conference Board’s consumer confidence index jumped to 81.4 in June, the best reading since January 2008 and up from 74.3 in May. Economists polled by MarketWatch had expected a 74.0 reading.
Consumers had better views both of current conditions and the future. The present situation index rose to 69.2 from 64.8, while the expectations index gained to 89.5 from 80.6.
Jonathan Basile, director of economics at Credit Suisse, says the expectations component suggests consumer spending growth of around 3 percent if consumers “spend” their confidence.
While the market has been concerned about tapering and bond yields have been surging, consumers are getting more optimistic. Jobs growth has been solid, house prices have boomed, and stock markets, while rocky recently, have seen gains.
“Consumers are considerably more positive about current business and labor market conditions than they were at the beginning of the year. Expectations have also improved considerably over the past several months, suggesting that the pace of growth is unlikely to slow in the short-term, and may even moderately pick up,” said Lynn Franco, director of economic indicators.
“With the unemployment rate creeping lower, home prices surging and, until recently, stock prices moving higher, household finances have gotten better, even if they still leave much to be desired,” added Stephen Stanley of Pierpont Securities.
One key element of the report, those who say jobs are “plentiful,” rose to an admittedly weak 11.7 percent, from 9.9 percent in May. Those who say jobs are “hard to get” edged up to 36.9 percent from 36.4 percent.
The encouraging consumer confidence report wasn’t the only positive data point released Tuesday.
An index of U.S. house prices saw the strongest monthly jump on record, while new-home sales reached a five-year high.
This was the first report since the Conference Board stopped giving the information to reporters on embargo, on fear that data could have leaked out to high-speed traders. The University of Michigan and Thomson Reuters consumer sentiment report does go out to high-speed traders early.
Distributed by MCT Information Services