WASHINGTON – Strong job growth lifted U.S. consumer confidence this month, as Americans looked past the economy’s dismal first quarter performance.
The University of Michigan said Friday that its index of consumer sentiment rose slightly to 82.5 in June from 81.9 in May. That is still below April’s reading of 84.1, which had been the highest in almost a year.
Confidence “has remained largely unchanged for the past six months,” said Richard Curtin, an economist at the University of Michigan and director of the survey. “This was remarkable” given that the economy shrank in the first quarter.
Still, the survey was mostly conducted when the government had estimated that the economy contracted at a 1 per cent annual rate in the first quarter. On Wednesday, that estimate was revised much lower, to show a contraction of 2.9 per cent.
And so far, steady confidence hasn’t yet translated into more spending. Consumer spending rose just 0.2 per cent in May after a flat reading in April. Weaker spending suggests growth won’t rebound as strongly as many economists had hoped. Some marked down their forecasts for growth in the second quarter, to roughly 2.5 per cent from 3 per cent.
Still, there were other positive signs in the University of Michigan’s report. Steady hiring is improving Americans’ finances, the survey found. Forty per cent of respondents said their finances had improved in June, the most in seven years.
And more Americans say it is a good time to sell a home, which can help fuel sales as most people need to sell their home before buying a new one. For the first time in eight years, half of all homeowners said sales conditions were positive.