A closely watched index of consumer confidence soared in January, rising to its highest reading in more than seven years, the Conference Board reported Tuesday.
The New York-based research group publishes the monthly Consumer Confidence Index, which leapt to 102.9 in January from a reading of 93.1 in December.
“A more positive assessment of current business and labor-market conditions contributed to the improvement in consumers’ view of the present situation,” said Lynn Franco, director of economic indicators for the Conference Board. “Consumers also expressed a considerably higher degree of optimism regarding the short-term economic outlook for the economy and labor market, as well as their earnings.”
The strong showing in January stands out against the same reading a year earlier.
“Currently, consumer confidence is almost 30 percent higher this January compared to January of last year,” said Chris Christopher, director of consumer economics for forecaster IHS Global Insight. “The increased levels of consumer confidence are currently in sync with increased levels of consumer spending.”
Among the bright notes in the monthly reading of confidence, respondents expecting growth in their incomes improved to 20 percent in January, from 16.2 percent in December.
“In a strong signal that the expansion is feeling more normal, consumer confidence surged in January to the strongest level since August 2007,” economists at RDQ Economics wrote in a note to investors. “Importantly the net jobs reading firmed by almost five points to the strongest level since February 2008. Six month expectations for jobs and income also firmed.”
The improving confidence, they said, supports the view of strong hiring in 2015 and that “rising wealth levels and lower gas prices are boosting household purchasing power.”