Consumer sentiment jumped again in this month to its highest level in five years, according to the latest gauge by the University of Michigan-Thomson Reuters.
The consumer confidence gauge rose to 83.1 in a preliminary October reading — the highest level since September 2007 — from a final September reading of 78.3. Sentiment has been increasing since August, with September seeing a four-point gain, following a two-point rise in August.
“The September improvement in confidence was due to more favorable prospects for the economy and for jobs during the year ahead. In addition, consumers reported some small gains in their financial situation. The improvement was due to a reduction in their debt levels and an increase in the value of their assets, primarily because of rising stock prices and home values. Nonetheless, consumers anticipate a rocky economic road ahead. Small wage increases, rising food prices, slowly declining joblessness, higher taxes, and an overall economy that will not expand continuously but suffer some setbacks over the next several years,” said Richard Curtin, director of the Thomson Reuters/University of Michigan Surveys of Consumers.
“We believe that the Michigan confidence index hitting the highest levels since September 2007 should remain a positive as consumers continue to become more optimistic,” Gennadiy Goldberg, a strategist at TD Securities, told MarketWatch.com. “Improved confidence should in turn begin to filter more prominently into consumer spending, thereby helping to support the economic recovery.”
According to the data released, a gauge of consumer expectations rose to 79.5 in early October from 73.5 in September, while the barometer of consumers’ views on current conditions increased to 88.6 from 85.7.