U.S. consumer confidence rose dramatically in February to the highest level since a year ago, when the U.S. economy’s outlook started to look brighter before souring again.
The Conference Board’s consumer confidence index now stands at 70.8, up from a revised 61.5 in January, helped by consumers’ improving assessment of the job market.
Analysts had expected a reading of 63. The February reading marks the highest level since February 2011 when it was 72.0. The index is still far below the 90 that indicates a healthy economy.
“This is a good report,” wrote Chris G. Christopher, Jr., senior principal economist, IHS Global Insight. “It is pointing to continued momentum of consumer confidence, and the current levels of consumer spending are not under threat from consumers feeling a gasoline price pinch.”
He pointed out that the official unemployment rate has fallen considerably over the past six months, and that initial claims for unemployment benefits are the lowest they’ve been since March 2008. Add to that, equity markets are on the rise and are relatively stable.
“Consumers feel more optimistic across the board, and there is hard evidence that the future is looking significantly better,” he wrote.
Consumer sentiment is closely watched, as consumer spending accounts for about 70% of all U.S. economic activity.