Consumer confidence in the U.S. jumped in May to the highest level in almost a year, propelled by the strongest views on inflation-adjusted income gains in a decade.
The University of Michigan’s preliminary index of sentiment rose to 95.8, the highest since June, from 89 in April. The median projection in a Bloomberg News survey called for 89.5. The measure of the outlook over the next few years jumped by the most since 2006.
The broad-based advance in expectations was led by lower-income and younger households, while all Americans projected real incomes would rise by the most in 10 years.
Current conditions also improved as the highest share of households since 2000 said their earnings had recently grown, indicating consumer spending can help the economy recover from a first-quarter slowdown.
“Consumers discounted the first quarter GDP report as a misleading indicator, instead, they have based their expectations more on their own direct experiences,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement. “The early May data are a welcome sign of an impending shift toward spending and away from savings.”