U.S. consumer confidence jumped to a 17-year high as optimism about employment prospects grew and Americans began seeing additional money in their paychecks from recently enacted tax cuts, data from the New York-based Conference Board showed Feb. 27.
Highlights of Consumer Confidence for February
• Confidence index rose to 130.8 (estimated 126.5), highest since Nov. 2000, from downwardly revised 124.3 in January.
• Present conditions measure climbed to 162.4, highest since 2001, from 154.7.
• Consumer expectations gauge increased to three-month high of 109.7 from 104.
The report reflects increased confidence in employment and incomes, which could support consumer spending. The labor differential, which measures the gap between respondents saying jobs are plentiful and those who say they’re hard to get, rose to 24.7 percentage points, the highest since 2001.
Recent tax legislation signed in December may have also buoyed sentiment, as many Americans saw bigger after-tax paychecks in February due to the law. That may have helped consumers shrug off the early-February 10% decline in stock prices, which have since recovered most of their losses.
“Despite the recent stock market volatility, consumers expressed greater optimism about short-term prospects for business and labor market conditions, as well as their financial prospects,” Lynn Franco, the Conference Board’s director of economic indicators, said in a statement. “Overall, consumers remain quite confident that the economy will continue expanding at a strong pace in the months ahead.”
• Share of respondents expecting stock prices to increase in the year ahead fell to 41.3% from a record 51%.
• 25.8% of consumers said they expect better business conditions in next six months, up from 21.5% in previous month.
• Share of households who expect incomes to rise in next six months rose to 23.8%, highest since 2001, from 20.6%.
• Buying plans for homes, major appliances and new cars increased.