NEW YORK, N.Y. – Americans’ confidence in the economy jumped this month to the highest level since February, bolstered by a brighter outlook for overall business conditions and hiring.
The Conference Board said Tuesday that its consumer confidence index rose to 70.3. That’s up from 61.3 in August, which was revised higher. And it’s the highest reading since February, when employers added 259,000 jobs and many thought the recovery was strengthening.
The survey is watched closely because consumer spending drives nearly 70 per cent of economic activity. The reading is still below 90, a level that indicates a healthy economy. The index hasn’t been that high since December 2007.
Consumer confidence has fluctuated sharply this year. It has fallen five times in the past nine months, hitting a low for the year in August.
The latest increase could be a positive sign for President Barack Obama, who is facing re-election at a time when the economy is the top issue on most voters’ minds.
The survey showed consumers were more optimistic about the current availability of jobs and their outlook over the next six months. Their confidence in the job market is higher, even though employers added just 96,000 jobs in August — too few to keep up with population growth.
And consumers’ expectations for future growth over the next six months surged.
“This has recouped the ground we lost. Consumers see the economy moving ahead,” said Lynn Franco, director of economic indicators at The Conference Board. But she cautioned that the index is volatile.
Some economists also question whether the higher level of confidence is sustainable. They’ve seen the index spike briefly since the Great Recession ended. Some say confidence could be affected by negative campaign ads that focus on the economy.
Mark Vitner, a senior economist at Wells Fargo, said former President Bill Clinton may have helped boost confidence in September with his Sept. 5 speech at the Democratic National Convention.
Clinton “rekindled memories of better economic times” and assured voters that the U.S. economy was on the right track, Vitner said.
The Conference Board consumer confidence survey was conducted from Sept. 1 through Sept. 13.
The survey also followed the Republican National Convention, at which Mitt Romney, the Republican presidential nominee, promised he would create 12 million jobs if elected.
Vitner says there were other factors that helped boost confidence. Stock prices are higher and the housing market has been recovering, he noted.
The latest evidence of that was found in the Standard & Poor’s/Case Shiller index released Tuesday, which showed home prices kept rising in July across the United States. Prices were buoyed by greater sales and fewer foreclosures.
National home prices increased 1.2 per cent in July, compared to the same month last year, according to the index. That’s the second straight year-over-year gain after two years without one.
Steady price increases and record-low mortgage rates are helping drive a housing recovery
The consumer confidence survey polled 500 people. For the first time since February, both the index that measures how consumers feel now about the economy and their outlook for the next six month rose. Consumers were considerably more optimistic about the short-term outlook for business conditions, employment and their financial situation.
Those expecting business conditions to improve over the next six months increased to 18.2 per cent from 16.7 per cent. Those anticipating business conditions to worsen decreased to 13.8 per cent from 17.6 per cent.
Consumers expecting more jobs in the months ahead increased to 18.5 per cent from 15.8 per cent. Those anticipating fewer jobs declined to 18.5 per cent from 23.7 per cent.
The proportion of consumers expecting an increase in their incomes edged up to 16.3 per cent from 16.0 per cent.
AP Economics Writer Christopher S. Rugaber in Washington contributed to this report.