Consumer confidence in the U.S. unexpectedly climbed in August to the highest level in almost seven years, reinforcing signs of a strengthening outlook for the second half of 2014.
The Conference Board’s sentiment gauge rose to 92.4, the highest since October 2007, from a revised 90.3 a month earlier, the New York-based private research group said. The median forecast in a Bloomberg News survey called for a decline to 89.
Americans are finding more reasons to be upbeat about their prospects for the rest of the year as recent reports pointed to a pickup in the job market and stock prices advanced to records. Stronger sentiment will also help underpin consumer spending, which makes up almost 70 % of the economy.
“Consumer confidence can sustain these high levels and even build on it a little,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics, said. “The key driver is the labor market, and the numbers there have been showing an improvement.”
Estimates of 71 economists in the Bloomberg survey ranged from 85 to 94 after a previously reported July reading of 90.9. The gauge averaged 96.8 during the last expansion and 53.7 during the 18-month recession that ended in June 2009.
The Conference Board’s barometer of present conditions increased to 94.6, the highest since February 2008, from July’s 87.9. A gauge of consumer expectations for the next six months declined to 90.9 from 91.9 a month earlier.
“Consumers were marginally less optimistic about the short-term outlook compared to July, primarily due to concerns about their earnings,” Lynn Franco, director of economic indicators at the Conference Board, said in a statement. “Overall, however, they remain quite positive about the short-term outlooks for the economy and labor market.”
Looking ahead, the proportion of Americans who said jobs would become more plentiful in the next six months fell to 17% from 18.7% in July. About 15.5% projected their incomes would increase over the period, the fewest since March.
Americans’ assessments of current labor-market conditions were more upbeat. The share of respondents who said jobs were currently plentiful climbed to 18.2%, the most since March 2008. The 2.6 point jump from the prior month was the biggest since January 2006. Those who said positions were hard to get decreased to 30.6, the fewest since July 2008.